DAX Index Daily Fundamental Forecast – November 24, 2017

The DAX remained steady for most of the day yesterday and closed the day slightly higher and above 13000 which should give some hope for the bulls. The initial move was down for the index but it began to recover later in the day and ultimately ended the day higher leaving the bulls to fight another day. The political developments in Germany definitely have been having a say on the way the markets have been moving and the same was the case yesterday as well.

DAX Under Pressure

It did help the index that the German GDP came in as per expectations and this was a strong 0.8% number which gave a relief to many investors that the German economy was still doing strong despite the domestic political turmoil and the goings on in the rest of the Eurozone as well. There has not been much headway in Germany over the coalition talks and the situation continues to be fluid which means that anything could happen.

The German leader Merkel is still in talks with FPD and other parties for the coalition and they have been trying very hard to thrash out a deal. But the more the situation drags on, more will be the pressure on the DAX as uncertainty is something that traders do not like. Also, the more its drags, the less likely is the possibility of a breakthrough happening and this throws open the possibility of another elections which will only add to the uncertainty in the short and medium term as well.

Having another election gives no assurance of a stable government being formed the next time around and it could also lead to a situation where the voting gets even more fragmented and that is not good for the German government and the economy as well. All of these factors are weighing on the DAX and that is why we are advising our traders to stay away from the markets for now and allow things to settle before picking a specific direction.