DAX Daily Fundamental Forecast – January 17, 2017

The DAX opened weakly for the day yesterday due to global fears surrounding the Brexit process. This increased the risk all around the stock markets and this was reflected in the DAX as well that opened weakly and continued to trade weakly for most part of the day. It is to the credit of the bulls that they managed to hold up the index despite the risks surrounding the Brexit process which is likely to affect the German economy as well.

Over the weekend and yesterday, it has become clear that the UK government is likely to announce a hard Brexit and make sure that the exit would be a full and clean one and not something that is half here and half there. It basically means that the UK economy will need to gear itself up for some hard times and this is detrimental not only for the UK but also the other major economies of the eurozone that do large business with the UK.  Germany is also one such economy and it is surely going to be affected by this process but the extent to which the Brexit will affect the German economy is something that remains to be seen. This was the major risk and fear around the stock markets yesterday and the DAX opened lower and consolidated and ranged for most of the day. It might take a day or two for the fears to recede and things to become clear and until then, we can expect some more consolidation near the highs of the range.

Looking ahead to today, there is no major news from the German region but we have the UK PM May making a speech regarding the Brexit process and this is likely to bring in some volatility during the course of the day in the stock and the currency markets and if the market views the speech as negative, we might see some more correction in the DAX.