DAX Index Daily Fundamental Forecast – March 14, 2018

The DAX index fell hard during the course of the day yesterday as the weak inflation data from the US helped the euro to move higher during this period and this generally tends to drive down the stock markets in Europe and thats what we saw yesterday. It is indeed a surprise that we say that the inflation data was weak when, actually the data was as per expectations.

DAX Crashes Lower

But with the growing anticipation of rate hikes and with the growing concern over the incoming data, even those times when the data comes in as per expectations and does not beat expectations is considered to be something as a failure for the US and the Fed and the dollar is sold. But yesterday, the risk and uncertainty around the globe increased not just due to the fact that the inflation data did not beat expectations but due to the firing of the US Secretary of State by Trump.

Not only that, we also have reports of the US administration proposing to impose tariffs on Chinese goods and this is likely to bring in a full fledged trade war between some of the biggest economies in the world. Also, we are seeing this leading to a lot of concern and uncertainty and this is why we are seeing the stock markets dropping all over the world once again, in a scenario that is similar to the drop that we saw last week. The DAX fell hard on these developments and it fell through the 12300 region and trades below the 12200 region and this is likely to continue in the short term.

But overall, the index continues to trade within the larger range and this should keep both sets of traders, the bulls and the bears interested. On the news front, we have a speech from the ECB President Draghi but in general, he does not talk much on monetary policy unless it is absolutely essential. Hence it remains to be see how the index would react.