DAX Index Daily Fundamental Forecast – September 28, 2017

The DAX index finally broke through yesterday closing the day just short of the 12700 mark during the course of trading yesterday and it is likely to get stronger in the coming days. The uncertainty on how the next German government would pan out still continues to hang in the balance but that feeling has been generally shrugged off during trading yesterday as the index moved higher.

DAX Wakes from Slumber

One of the prime drivers for the move was the announcement of the merger of the German rail operations run by Siemens AG with the rail giant Alstom from France. This is expected to be a mega merger to counter increasing competition especially from the Chinese rail companies. This indicates improving economic ties between France and Germany and that generally augurs well for Germany and for the Eurozone in general as they are the 2 biggest economies in this zone and any kind of closer cooperation between them is likely to be beneficial for the Eurozone economy.

The political impasse is likely to be a drag on the DAX but it cannot continue to ignore the global developments for long and hence, sooner or later, we could see the index move up. The German economy continues to be strong, as seen in the strong numbers that their economy continues to throw up over the last few weeks and their economy is based on manufacturing which also means that their economy rests on a strong foundation and unlikely to be shaken very easily. With this as the background, we are looking at the DAX as a long term bullish play as the fundamentals continue to favor that side.

Looking ahead to the rest of the day, expect a steady opening of the DAX and a slow and steady move upwards which is likely to take the index above 12700 during the course of the day. Whether the bulls can continue to hold the index there remains the key.