DAX Index Daily Fundamental Forecast – February 27, 2018

The DAX index traded in a strong and steady manner for much of the day yesterday as it continued to trade above the 12500 region during this period. The risk sentiment seems to be returning to the markets in a slow and steady manner but the impact of that is seen more in certain markets than the others.

DAX Steady

The impact of the improvement in risk sentiment is being felt more in the US stock indices which have rebounded from their losses a few weeks ago and have since been trading in a very strong manner. The DAX has been trying to imitate that rebound but so far, the impact of that has been minimal and the speed and the strength of the rebound is showing up to be quite short of what was expected from it. This has been happening despite the strength in the incoming data from the Eurozone.

Yesterday, the ECB President Draghi made a speech and in that, he did mention about the growth in the Eurozone. He is someone who is generally a dove but the incoming data of late has been so strong that even he could not ignore its existence any more and as a result of his speech, the index did get a boost. But all this would lead to the tapering of the QE sooner rather than later and we are likely to see this bringing in some uncertain times for the DAX.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone or Germany but we should see a steady opening for the DAX as the markets prepare themselves for the end of the month. The trade positioning and the month end flows are likely to keep the traders busy for the day but we do not expect this rebound to last for too much longer and it may soon be time to short the index.