DAX Index Daily Price Forecast – DAX to Continue Dovish Price Action Owing to Risk Averse Investor Sentiment

Germany equities were lower at the close on Wednesday, as losses in the Technology, Basic Resources and Construction sectors propelled shares lower. At the close in Frankfurt, the DAX fell 0.73% to hit a new 52-week low, while the MDAX index declined 0.57%, and the TecDAX index fell 0.73%. Declining stocks outnumbered rising ones by 432 to 273 and 73 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was up 11.31% to 21.56 a new 6-month high. Major European indices and equity markets closed in red yesterday owing to high risk averse trading activity across European and US market hours. The bearish sentiment in market was further supported by increase in demand for USD as safe haven instrument and weak European and U.S. economic data.

Equity Markets Are Expected To Move Dovish Over Cues From Wall Street & Asian Indices

Investors continued to trade in risk averse fashion owing to wall street rout and escalating geo-political and economical tensions across key markets. Over the past week, nervousness around U.S. corporate earnings and geopolitical uncertainty added to heightened worries about global growth, Italy’s free spending budget and Sino-U.S. trade tensions. On Wall Street, the S&P 500 declined for a sixth day in a row as weak forecasts from chip makers added to concerns about the impact on earnings from tariffs and a slowdown in China’s economy. Asian shares plunged on Thursday as hundreds of billions of dollars hemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on Wall Street since 2011, wiping out all its gains for the year.

Stock investors have become increasingly nervous about lofty equities valuations, a likely peak in corporate earnings momentum, faster rate hikes in the United States and an ongoing Sino-U.S. trade war that threatens to hurt world growth resulting in fund flow changing direction from risky assets to safe haven instruments and bonds. DAX futures trading in international market ahead of Frankfurt market opening was down over 0.70% indicating possibility for bearish opening of German stock market. DAX is expected to open dovish for the day over cues from international markets but maintain a range bound price action across the day near yesterday’s lows.