DAX Index Daily Price Forecast – DAX Could See Two-Way Price Action Based on ECB MPC Update.

DAX index is set to open positive on cues from international market but depending on the outcome of ECB MPC update, there is a chance for a sharp downside move.
Colin First
DAX Thursday
DAX Thursday

Conflicting headlines from American market on Tuesday over Sino-U.S. trade talks was the main driving force behind European equity markets yesterday. While Sino-U.S. trade war proceedings and IMF global growth forecast inspired bearish investor sentiment resulting in major European markets opening in red, equity market saw mixed price action later in the day owing to return of risk appetite in broad market to some extent on headlines that Chinese government planned to increase fiscal spending to boost its economy. However dovish quarterly financial data outcome from some major European companies continued to inspire risk-averse trading activity resulting in a mixed market performance at the close of European market hours.

Cautious Investor Sentiment Continues To Limit Gains

German stock market saw mixed performance on cues from local and international market mirroring price action in the overall Euro area market. While risk appetite had returned to market yesterday, investors held back from placing major bets as they awaited European Central Bank’s monetary policy committee meeting scheduled to occur today. While the DAX index which represents overall German stock market saw a decline of 0.17% at end of the day, sectoral indices had mixed outcome. Two other most-watched indices MDAX and TECDAX closed positive for the day up 0.41% & 0.60% on the day as sectoral indices saw divided action which left stocks in Frankfurt stock exchange on a tie at the close of German market hours. Out of total 778 stocks in exchange, 354 closed in green and 332 closed in red while rest remain unchanged at end of the day.

Stocks which saw most gains were from Technology, Utilities, Transportation and Logistics sector while stocks which saw decline are Chemicals, Construction, Food and Beverage sectors. Major indices and stocks from Asian indices saw positive price action on cues from Wall Street but gains were limited as investors continue to exercise caution ahead of today’s ECB MPC meeting update and Senate meeting in the U.S. which will vote to decide on re-opening US government. DAX futures trading in international markets was up by 0.33% ahead of Frankfurt market opening which suggests German equities are likely to open positive for the day. But downside price action cannot be ruled out as investors remain cautious ahead of ECB MPC update and dovish forward guidance for rate hike plans or comments which stress on recent economic slowdown in German markets are likely to push DAX into sharp declines.

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