DAX Daily Fundamental Forecast – December 2, 2016

The DAX index was firmly in the grasp of bears yesterday, in cue with the stock markets all around the world as the index was pushed down through 10600 and 10500 and rests below that as we write this. The index closed down 1% for the day with most of the shares ending the day below their close on the previous day. The relentless rise of the US dollar seems to have started to weigh on the stock markets as this would increase the borrowing costs as well and this has started affecting the US stock markets and this effect will spread to the other stock markets as well.

The markets also starts getting a bit jittery as we get closer to the December Fed meeting where the market expects a rate hike to be announced. This has already been priced in to the markets and further rate hikes will not be viewed positively by the stock markets as this would mean that the funds get pulled out of the stock markets and get pushed into the dollar. We expect the stock markets to continue to be under pressure over the next couple of weeks.

As for today, we saw a mixed close in the US stock markets yesterday and this is bound to affect the euro markets as well. So, we expect a bearish opening to the DAX for today and with 10600 broken, we can safely expect a test of the support at 10380. We do not have much economic news out of the euro region for today though we have the NFP employment report from the US later on. A strong data in that would lead to a confirmation of the December rate hike and also increase the chances of further hikes in 2017 and that is likely to bring more pressure to the stock markets.