DAX Index Daily Fundamental Forecast – January 17, 2018

The DAX closed lower and weaker for the day yesterday as the news of the talks about the coalition breaking down and the fact that the Euro has managed to pick itself up during the second half of the day, laid a lot of pressure on the index and it fell below the 13200 region to end the day. The trading seems to be pretty choppy at the moment with the bulls and the bears vying for control.

DAX Looking Weak

One of the major reasons for the move higher in the index over the last couple of weeks was the progress made in the coalition talks between Merkel and the SPD party and in fact, it was reported that the talks were on the verge of conclusion and that a deal was about to be struck. But all this came unstuck over the last couple of days as reports began to emerge that the talks are on the verge of breakdown and if that turns out to be true, that would be a huge blow to Merkel and Germany as a whole as well. If the talks dont come to fruition, then Merkel would be left with no choice but to call for another election.

And this would not be good for the markets and the economy of Germany as this would mean additional uncertainty and confusion as new elections could lead to an even more fractured verdict for Merkel and this could also throw up new combinations for forming a new government. Uncertainty is not liked by the markets and if this news is unconfirmed, we could see a crash in the DAX. The index is already under pressure by the fact that the QE would be discontinued by the ECB during the course of this year.

Looking ahead to the rest of the day, we do not have any major fundamental drivers for the DAX and with the lack of any major economic data for the day, we are likely to see the choppiness continue in the index with a bearish bias.