DAX Index Daily Fundamental Forecast – April 26, 2017

We had mentioned in our forecasts at the beginning of the week that the French election results at the beginning of the week could be the trigger for the DAX to finally break through the range highs and head further north and that has happened over the past couple of days as the index broke through the range highs in the 12350 region and continued to push through 12400 and it now sits above 12450 as of this writing and looks good for more.

DAX Skyrockets on French results

The French Presidential candidate Le Pen was considered as a hardliner who was against the concept of the euro and hence, leading upto the elections, the markets were in a wait and watch mode to see if the French people were going to follow the example of the US and make her win. But the French people chose to focus on development rather than on Islamophobia and gave a good majority win for the pro-business candidate Macron and placed both of them in the run off on May 7. Opinion polls predict an easy victory for Macron in the run off and this was enough for the markets to switch to a risk on mode across the world and especially in the Euro region.

This was taken as a big yes vote for the entire Eurozone as such and the French and the German stock markets appreciated this with a resounding bull run and this is the reason for the DAX index to move to its all time highs. Germany is also set to face elections in the second half of the year but this vote is likely to boost the chances of Merkel as her stand on the euro has been vindicated. We expect a retest of the 12350 region in the near future and once that is done, we should see the DAX well on its way in the next leg of this run.

Looking ahead to the rest of the day, there is no major news from Germany and so we can expect the DAX index to continue to push higher, especially considering the fact that the US stock markets traded strongly yesterday. The risk on mode is well and truly on and this should help the DAX in moving higher.