DAX Index Daily Fundamental Forecast – September 25, 2017

The DAX index moved slightly higher on Friday but well within range as the market did not want to commit itself on either side ahead of the weekend which was to see the German elections being held and Merkel being challenged. The results of the election were as per expectations but that should largely disappoint the markets as this is likely to lead to a lot of uncertainty over the coming days and weeks which should keep the markets guessing.

DAX Index Likely to Open Lower

Before the elections, all the opinion polls had confirmed that the party of Merkel would win but they also said that Merkel would not be able to get the majority to form the government. That is exactly how it has panned out so far as the elections were held on Sunday and almost all the results are now out. It shows that Merkel has won the majority but it is not enough for her to form the government. This means that she needs to reach out to other parties to gain a coalition and this process could take several days or even weeks.

This has also reduced the power of Merkel as a large leader in the Eurozone and it remains to be seen how she is going to guide the zone especially when the Brexit process is going on and some strong leadership is required for the zone. The markets do not like uncertainty and they would wish that this mess is sorted out very soon so that it does not hang on top of the head of the market for long. The markets and the traders are likely to watch the developments pretty closely to see how it all pans out.

The DAX index is likely to begin the day with a gap lower as the uncertainty over the election results and the formation of a coalition is likely to weigh on the markets in the short and medium term, as long as the uncertainty and confusion persists. It would be good for the DAX if the situation is sorted out sooner but that is unlikely to happen. Expect the region around 12350 to act as support bit brace yourself for some tough bearish reaction from the index.