DAX Index Daily Fundamental Forecast – September 26, 2017

The DAX index finished at the lows yesterday which was to be expected as it suffered a double blow yesterday on account of the German elections and also due to the tension in the Korean region which keeps throwing up some surprise or the other every week or so. This pushed the DAX below the 12600 region ad considering the crashes in the other stock markets around the world, it has to be said that the correction in the DAX was comparatively less.

DAX Moves Lower on Political Impasse

Germany went to the elections on Sunday and the party of Merkel got a majority, which was something that was to be expected and the same was predicted by the opinion polls ahead of the elections as well. But the party fell short of the majority that was needed to form a government on its own and this has led to a situation where it has to depend on a coalition. This has led to uncertainty as the process of forming a coalition is likely to last for days and weeks and it would also mean that Merkel would have to make compromises on some of her important policies.

This led to a gap down in the DAX when it opened yesterday and it is to the credit of the bulls that the move down did not extend much lower and was followed by a decent sized bounce which took the index back above 12600. Then came the news that the foreign minister of North Korea saying that US had declared war on it and this led to an escalation of tension in that region which shocked the stock markets and they crashed around the world and this led the DAX lower once again and it ended the day lower.

With the uncertainty looming in the political circles in Germany, it is likely to weigh on the DAX index for the short term. Hence expect the DAX to trade weakly for today and with no news from the Eurozone for now, we can expect this to continue for the rest of the week as long as the German politcal impasse continues.