DAX Index Daily Fundamental Forecast – April 21, 2017

The DAX recovered a bit yesterday on the back of comments from the US Treasury Secretary Mnuchin who confirmed that there is going to be some big tax cuts for the corporates and the middle class in the near future. This was enough for the investors to continue the Trump trade and continue to pump in funds into the stock markets in the hope that the tax cuts would arrive soon and help them to reap rewards. This boost to the stock markets in the US rubbed off on the European stock markets as well and this helped to move the DAX back above 12000 where it continues to sit as of this writing.

DAX In Choppy Trading

Traders are a bit wary if investing and pushing the DAX too high as there are some Europe specific risks that continue to haunt the European stock markets, especiall the DAX. One of the risks is the upcoming French elections where all indications are that Le Pen would lose the election. This would be good for the Eurozone as such but unless and until the elections and the results are out of the way, the investors would want to adopt a wait and watch attitude.

Also, the announcement of the snap polls in the UK in June also seems to have had an effect on the DAX as this would mean that the Euro leaders, especially Merkel, is likely to have some tough negotiations over the Brexit process with a strong UK PM and this would mean that the Euro and Germany, in particular, may be forced to lose some benefits that it had hoped to keep.

A combination of the above has placed a strong lid on the DAX index and that is why we are seeing the DAX moving around in a choppy manner. Looking ahead to the rest of the day, we expect some more choppy trading leading up to the weekend while we expect a bullish tone next week.