DAX Index Daily Fundamental Forecast – February 2, 2018

After being under pressure since the beginning of the week and chopping around as a result, the DAX index finally decided that the next way was down and hence it crashed through the support and ended the day below the 13000 region. This is a general trend that has been seen all across the markets and we may be in for a deeper correction in due course of time.

DAX Falls Through Support

The move lower has been driven through by the increase in global yields. We have seen the yields rising in the US and also parts of the Eurozone as well and what this does is that, the larger investors tend to pull the funds out of the stock markets and invest them into yields as it gives them better and safer returns at this point of time. This is one of the main reasons for the buy side to give away in the stock markets and now the bears seem to have seized control.

The signs were there since the beginning of the week as the index was not able to make much of a headway during this period and the index began to slowly drift lower. The DAX was expect to get some support in the 13200 region and then the traders were expected to decide which way the index had to go but that problem was sorted out yesterday as the bond yields rose and pushed the global stock markets lower. We also saw the euro being pushed higher during the last 24 hours and this has only placed even more pressure on the DAX.

Looking ahead to the rest of the day, we do not have any major economic news from the Eurozone or Germany for the day but we have the employment report from the US in the form of the NFP data. It is likely to have an impact on the stock markets as it is important for the dollar and the indices to show some strength through some strong data. Though the impact on the DAX index from this data might be limited, we will have to see how the index closes today to gauge the short term direction and whether we are going to see even further correction.