DAX Index Daily Fundamental Forecast – November 21, 2017

The DAX closed higher for the day in a surprising move despite the political turmoil that is being witnessed in Germany since the beginning of the week. The index did start the day on the backfoot but as the day progressed, some of the traders found an opportunity to buy at low levels and they have since made full use of it and pushed the index back above the 13000 region and it ended the day comfortably above that.

DAX Likely to Correct

Things did not seem as rosy during the start of the day as the news that the coalitions talks in Germany have failed rocked the markets around the world. Merkel has seemed confident of building a coalition once the results of the elections showed that she did not manage to get the majority that was needed to form a government of her own. But with the FPD pulling out of the talks, she has been forced to seek new partners for the coalition but so far, it appears that it might be a tough task for her.

The last resort is to call for new elections and that will only add to the uncertainty as the results of the new elections could end up making the verdict even more fragmented and weakening the position of Merkel even further. It looks as though she would do her best to try and find new partners and thrash out a deal with them but at this late stage, it appears as though it is going to be increasingly difficult.

Looking ahead to the rest of the day, we do not have any major economic news from Germany for the day which would mean that the focus of the DAX and the traders would continue to be on the political scene. The sooner this issue is dealt with, the better it would be for the markets. The DAX has managed well so far but we believe that we might see a correction in the index during the course of the day today.