DAX Index Daily Fundamental Forecast – February 22, 2018

The DAX index followed the template of the global stock markets yesterday as there were not much fundamentals or economic factors to drive the index during the course of the trading yesterday. We had mentioned that the FOMC meeting minutes were likely to have an impact on the index, despite the fact that it did not have anything to do with the DAX, and that turned out to be true as we saw increased volatility towards the end of the trading day.

DAX Under Pressure

Much of the early part of the day yesterday was spent on consolidation and ranging as there was not much to drive the index. The DAX is likely to continue to be under pressure in the short and medium term, irrespective of how the rest of the global markets behave. Even if the index is driven higher, we believe that such moves are likely to be sold into, and hence the DAX would continue to move lower in the medium term as well, as much of this is due to the tapering of the QE which is bound to have an effect on the index.

With this being the case, the moves from yesterday were mostly based on the meeting minutes of the Fed. The release of the minutes saw the stock indices in the US moving higher, on the back of a weaker dollar and this helped the DAX to move higher through the 12500 region. But then there was a total reversal later as the dollar gained in strength and this has led the DAX lower as well.

Looking ahead to the rest of the day, we do not have any major fundamental or economic news from Germany or the Eurozone for the day and so we can expect some ranging and consolidation to continue between the 12200 and the 12500 regions, as has been happening over the last few days.