DAX: VW & Unions Come to Agreement on Job Cuts – Halts 5-Day Decline

Volkswagen and the worker’s union come to an agreement to cut 35,000 jobs through 2030.

dax stops 5 day decline

The DAX opened lower losing 0.25% at one point before making an attempt to recover 5 consecutive sessions in the red.

Union Deal Hailed a Victory

The announcement came Friday evening during after-hours trading, VW shares rose 2.4% on the news.

Union leaders said it was a Christmas miracle at the end of the 70-hour long negotiations. The longest talks with trade unions in the company’s history managed to avoid the closure of any plants and salary cuts of 10%.

Capacity production will be reduced or repurposed at all German plants. At the Dresden plant, vehicle production will be reduced from four lines to two.

The automaker said that deal would save €15 billion ($15.6 billion) a year in the medium term and saw no effect on 2024 guidance.

“With the package of measures that has been agreed, the company has set a decisive course for its future in terms of costs, capacities and structures,” VW Group CEO Blume said in a statement.

DAX Day Chart

DAX shows technical signs of rebound

The day chart above for the DAX shows a bull trend undergoing a correction. The market reached a new all-time high on December 13 and retraced towards the Ichimoku cloud.

The past 5 candles have all been red, something that doesn’t often present itself. The exceptionality of this event makes a bounce higher more likely.

We can also see that the market tested the support level from the previous high of 19,681 (blue line). In doing so it produced yesterday’s hammer candle, which is a bullish pattern.

The bullish signal is also substantiated by the fact that the retracement lower was prolonged, and that it bounced off the support level mentioned.

This level also coincides with the Kijun line (Crimson) from the Ichimoku system, adding further support to the likelihood of a bounce higher.

DAX Live Chart

DAX
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ABOUT THE AUTHOR See More
Gino Bruno D'Alessio
Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.
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