DAX Daily Fundamental Forecast – October 26, 2016

The German DAX had a largely positive day yesterday on improved earnings and improved business sentiment in Germany and continuing good news from the Euro region in general.

Yesterday, we had the German Ifo Business climate data coming in and it came in at a much better value of 110.5 against the expected value of 109.6. A reading of the data also showed that the manufacturing sector grew during that period and this is generally positive for any economy which has manufacturing as their base. This made the German stock market happy and led to some flurry of buying. Then there was the news from the Euro region which said that the next tranche of funds to be released to Greece was okayed as part of the bailout plans which showed that the Greece bailout plan was proceeding as planned. This cheered the markets even further and the DAX touched 10830 on the generally good mood all around.

We also had earnings releases from many companies with the French telecom company reporting a 1.6% increase in earnings. The market also looks forward to the earnings release data of German majors like Volkswagen and Deutsche bank. This overall good data and news from the stock markets kept the DAX at the highs of its ranges. Overnight, the SP500 has slipped as Apple earnings release came along and it showed that the numbers were mixed as the number of units sold and the revenue was down when compared to the same last year. This disappointed the markets and its effect was felt on the DAX as well as it broke back through 10800 and it sits at 10769 as of this writing.

Looking ahead to today, we do not have much of economic news from any part of Europe but it is the season of earnings releases and we will be getting the earnings data from a lot more companies in Europe and the US today as well which would have an impact on the index but we believe that with the DAX above 10700, the index would continue to remain buoyant.

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