Germany's DAX 30 Index: German stocks hold up well despite catastrophic jobs report – Bafin takes Wirecard under scrutiny

• German DAX Index finishes trading week slightly up
• Catastrophic labour market data from the USA weigh on the stock index only temporarily
• European Central Bank (ECB) examines purchase of junk - Insider

The German stock market closed the trading week with a slight plus, even though the unemployment rate in the USA rose to its highest level since the post-war period. Supporting the DAX on Friday was a media report that the ECB is considering the purchase of junk corporate bonds by Europe's highest monetary authority due to the coronavirus crisis. Shocking export figures from Germany could not dampen the stock market party, partly because the USA and China smoked the peace pipe early Friday morning.

DAX ends trading week slightly up

The German benchmark index DAX closed 1.37% up at 11,906.59 points. On a weekly basis, the German stock barometer gained over 0.3%. At the same time, it remained above the 50-day line at 10,706 points. Since the corona crash in mid-March, the share index has risen by almost 29%.

Among the individual stocks, Siemens shares were in demand. The German conglomerate rose by more than 6%, even though it revised its forecast for the current fiscal year, which ends in late September. Siemens now expects a "moderate decline" in comparable full-year sales. Previously, the German flagship company had forecast moderate growth. 

Meanwhile, stocks such as MTU Aero Engines, Munich Re and Adidas have flown out of the depots. The German payment service provider Wirecard is being closely scrutinized by BaFin because of its communications relating to the publication of the KPNG report on possible balance sheet fraud. The share lost 0.20%. 

The MDAX dropped 0.94% to 23,966.38 points and the SDAX gained 1.10%. The small DAX ended the trading week at 10,688.09 points. The technology-oriented TecDAX rose by 1.14% to 2,982.68 points.

Catastrophic labor market data from the US weigh only momentarily

The catastrophic labour market data from the USA did little to harm the DAX. The unemployment rate rose to 14.7% in April, according to the US Department of Labor. It was the highest level since data recording began in January 1948, and the more relevant unemployment rate U6 even climbed to 22.8%. Employment excluding agriculture (NFP) fell by 20.5 million. However, experts were expecting a job loss of 22 million.

"The loss of 20.5 million jobs in April was largely as expected based on the tsunami of jobless claims over the past six weeks," said US Chief Economist Paul Ashworth in a private note.

The reason why investors had not sold any shares according to the data is that the report was less bad than expected. In addition, the massive job cuts were mainly due to the increase in the number of unemployed people who temporarily lost their jobs.

"The good news is that 18 million of those people reported that they were on temporary layoff. In a normal recession, nearly all the unemployed are permanent job losers. Admittedly, temporary layoffs may still turn into permanent job losses. But, for now at least, the hope is that this means the unemployment rate will fall back much more quickly than normal, as the lockdowns are eased," Ashworth added.

ECB considers buying junk bonds

The DAX was also supported by a Reuters report, according to which ECB experts are also examining the purchase of corporate bonds with junk status by the highest European monetary authority due to the coronavirus crisis, according to insiders.

Concerns triggered by the ruling of the German Federal Court of Justice regarding the termination of the PSPP purchase programme by the ECB through the Bundesbank in Germany also receded, after the Federal Ministry of Finance, according to "Der Spiegel", considers the demands of the Constitutional Court for proportionality in the ECB's new bond purchase programme against the virus crisis to be fulfilled.

Signs of relaxation in the trade dispute between the US and China

Market sentiment was also supported by reports that the chief negotiators of the USA and China intend to stick to their first-phase trade agreement agreed in January.

At the beginning of the week, President Donald Trump had threatened to cancel the deal if China did not buy the agreed quantities of US goods. 

German DAX 30 key technical levels

In terms of technical analysis, the situation in the DAX turns bullish. The RSI is floating in bullish territory at 55.91 while the MACD is showing a buy signal. Support stands at 10,711.22 (pivot), 10,722.72 (10-day moving average) and 10,706 (50-day moving average). Meanwhile, resistances are at 10,963.71 (R3), 11,357.49 (100-day moving average) and 11,780.65 (200-day moving average).