(Bloomberg) --
Germany's benchmark DAX Index is poised to exit a bear market that began last month, after rising 20% from last month's low that was spurred by worries about the coronavirus pandemic.
The export-heavy gauge, which fell as much as 40% in the sell-off that began late February, has rebounded in recent weeks by indications that infection rates in parts of Europe may be nearing a peak and on positive signals from China, where the latest PMI figures pointed to a V-shaped economic recovery. The DAX advanced 3.4% as of 9:35 a.m. in Frankfurt.
“The current bounce in equity markets is banking on a rather optimistic scenario for Covid 19 infection curves and a quick revival of global economic activity. Hence it makes sense to see the DAX gauge to do better,” Frederik Hildner, a portfolio manager at Salm-Salm & Partner, said by phone. “However, not retesting the lows in the absence of major medical progress would simply be astonishing to me,” he says.
Read more: China's Bounce Helps Europe Shares. Up to a Point: Taking Stock
The DAX's rebound from a March 18 closing low has been led by Fresenius SE & Co. KGaA, Infineon Technologies AG and Allianz SE, up 43%, 40%, and 39% in the period respectively.
With recent gains, the German gauge has trimmed its 2020 decline to 21%, in line with the Stoxx Europe 600 Index.
“The economic impact has yet to be seen and can once again thwart the recent price recovery,” says Andreas Lipkow, noting that the recent bounce is more technical then fundamental.
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