European Stocks Resume Selloff as DAX Breaches Technical Support

(Bloomberg) -- A tentative rebound in European stocks evaporated in afternoon trading, with Germany’s DAX Index leading losses after breaking below a key technical level.

The DAX fell sharply after crossing below its 50-day moving average, posting its worst drop in almost three months. It closed down 1.4 percent after earlier rising as much as 0.9 percent. The Stoxx Europe 600 Index slid 0.5 percent for a fourth session of declines, wiping out intraday gains of 0.8 percent.

Early bullishness on Thursday soured in afternoon trading amid weakness in U.S. tech shares, with equities extending a selloff that has gripped markets this week after a stellar start to the year. U.S. 10-year Treasuries pared losses after yields breached 2.75 percent following Wednesday’s hawkish Federal Reserve statement.

“The market is a bit stretched and the DAX hitting some technical levels, like the 50-day moving average, has certainly triggered some of the declines,” said Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland. “It looks like more of a technical thing -- the fundamentals are still solid, earnings are overall good and the economy is doing well. Any dip would be short-term and a buying opportunity for me.”

The DAX was the fell the most among euro-area markets, with losses in Daimler AG adding to index woes after the carmaker issued a forecast indicating profit growth will come to a halt this year. Health-care shares were the worst performers in the Stoxx 600, led by a slide in Novo Nordisk A/S after its earnings missed estimates.

--With assistance from Blaise Robinson

To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net, Aleksandra Gjorgievska in London at agjorgievska@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Richard Richtmyer

©2018 Bloomberg L.P.