What’s next? – DAX 05.06.17

DAX

The German index futures gapped higher in early trading on Monday, adding almost 1.5 percent by the time of this writing and moving above the 12,850 mark. This move comes as a bit of a surprise considering the recent terrorist attack in London.

The DAX is extending gains despite downbeat labor data in the United States. The US Labor Department reported a 135,000 jobs build in May, falling short from expectations. While traders did notice a small reaction to the news on Friday, the effect quickly vanished.

Market analysts have pointed out that the 12,750 level looks as a pretty solid support, which offers still opportunities for bullish positions to 13,000 points. Nevertheless, some volatility can be expected before reaching that psychological limit and a short-term downward correction is not something to be scared off.

The index remains supported by a weaker position of Theresa May’s government ahead of the early parliamentary elections this month and a global upside trend. At this stage, selling is not an option you can seriously consider as momentum is clearly pointing at the other side.

Global growth is looking health and even US markets closed on all-time record highs on Friday despite the disappointing labor data. That being the case, we can again bet on an upward move.

As Germany is the EU’s first economy, a bullish extension of the DAX can provide some support to other regional indexes, like the French CAC for instance.

Earlier this morning, Markit’s Services PMI for Germany came in above expectations at 55.4 points, compared to an estimated 55.2 points.