Germany’s DAX index has weakened on a weekly basis and closed the week at 15,169 points. The Omicron variant of the coronavirus continues to keep investors in a negative mood, and according to Germany’s Health Minister Jens Spahn, Germany is also not ruling out a new lockdown.
Financial markets are reacting negatively because it is still unknown to what degree the vaccines will be effective against the new strain and would it slow economic progress.
Robert Koch Institute (RKI), a disease and control center in Germany, reported that more than 102,000 people in Germany have died as a result of coronavirus and the country continues to see a record-breaking number of cases.
Germany has introduced new measures last week, and only vaccinated or recently recovered from Covid will be allowed to go to cinemas, leisure facilities, restaurants, and shops.
It is also important to mention that unvaccinated people can only meet two people from another household, and Germany will limit the number of people at large events.
Germany’s fourth wave of Covid is the most severe so far, and Angela Merkel warned that hospitals were stretched to the point of patients being moved to different areas for treatment. Acting Chancellor Angela Merkel added:
We have understood that the situation is very serious and that we want to take further measures in addition to those already taken. A nationwide vaccination mandate could come into effect from February 2022, after it is debated in parliament and following guidance from Germany’s Ethics Council.
The new strain also complicates the outlook for how aggressively the European Central Bank would normalize monetary policy to fight inflation.
The degree of ECB’s concern about the economic situation will significantly influence stock markets in the near term, and for now, everything indicates that growth forecasts will likely be downwardly revised.
According to preliminary estimates, the German Consumer Price Index reached a record of 6% YoY in November, which confirms that inflation had spread more than previously expected and that the risk of persistent inflation has risen.
Germany’s GDP grew by 1.8% in the third quarter, but the rising inflation, covid pandemic, and the world’s supply chains crisis represent a serious issue for economic stability.
DAX remains under pressure
Data source: tradingview.com
DAX index weakened last trading week, but it continues to trade above the 15,000 points. Further turmoils should not be discounted, and if the price falls below 14,800 support level, the next target could be around 14,500 or even 14,000.
Summary
Germany announced a nationwide lockdown for the unvaccinated, and according to new measures, only vaccinated or recently recovered from Covid will be allowed to go to cinemas, leisure facilities, restaurants, and shops. The Omicron variant of the coronavirus continues to keep investors in a negative mood, and further turmoils for the Dax index should not be discounted.
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