GER30 Plunges on Renewed Ukraine Jitters

  • GER30
    (${instrument.percentChange}%)

GER30 – H4

The day started with hopes of a diplomatic solution to the Ukraine dispute, after the White House had announced on Sunday that US President Biden accepted "in principle", a meeting with Russian President Putin, but that will occur only "if an invasion hasn't happened".[1]

However, Russia says that there are no concrete plans for such summit, as media outlets report, causing fresh jitters and new wave of risk aversion to the markets. [2]

Germany and Europe depend on Russian gas and any disruption can spike prices, with high inflation already hitting the bloc. More bad news came from Bundesbank earlier, which said "German economic output is likely to decline again markedly in the first quarter of 2022". However, it sees it rebounding "strongly" in Q2, provided "the pandemic subsides and the supply bottlenecks continue to ease". [3]

Germany and Eurozone preliminary manufacturing PMIs were underwhelming, while German Producer Price Inflation surged 25% y/y in January, from +24.2% prior.

GER30 started the day on offensive but after sentiment tanked, there was a complete reversal and it now sets new 2022 lows, as we had warned from our last analysis. This exposes it to 14,448, but fresh catalyst may be needed for a deeper decline towards 13,848.

Trade the News: View our Economic Calendar

Despite the sharp drop, the move is overextended and this could provide support to the index and allow it to return above 15,000 but significant and sustained improvement in sentiment is needed, in order to look towards the EMA200 and the descending trend-line from this year's highs (at round 15,450).

Caution is needed, since voltility is high and we have seen many shifts in sentiment as markets digest news around Ukraine.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 21 Feb 2022 https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/20/statement-from-press-secretary-jen-psaki-5/

2

Retrieved 21 Feb 2022 https://www.dw.com/en/ukraine-latest-moscow-says-no-concrete-plans-for-putin-biden-summit/a-60847723

3

Retrieved 23 Jun 2022 https://www.bundesbank.de/resource/blob/885502/6d964b6c18d610b26472a3eb03a1b068/mL/2022-02-ueberblick-data.pdf

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