DAX Index Daily Price Forecast – DAX To Open in Red On Caution Ahead of ECB MPC Update

European equities yesterday saw sharp declines in all major European exchanges. Equities have been trading with a mixed tone laced with a high level of bearish influence since the trading session started for the week. Cues from the international market, as well as talks between UK & EU representatives which failed to see both parties come to any agreement on Irish backstop agreement or how to proceed further as the deadline for Brexit, approaches closer by with each passing day weighed down investor sentiment considerably. Further, investors caution ahead of ECB update as traders and analysts believed that rate hike plans for 2019 are to be delayed further resulted in Equities seeing a sharp decline. Also dovish cues from Asian & US Wall Street affected performance in Frankfurt exchange owing to the German economy’s trade-dependent nature.

ECB MPC Update & Press Conference To Provide Directional Bias

At the close of trading session in the Frankfurt stock exchange, the overall activity hinted at dovish activity as visible from all major benchmark indices which closed in the red. Out of 778 stocks trading in the exchange 399 stocks closed in red while 92 stocks closed unchanged at end of trading session. As per data on the performance of sectoral indices in the exchange, 10 of 18 sectoral indices closed in the red. Stocks from Automobile, Technolgy, Transport and Logistics sectors saw high loss during yesterday’s trading session with all three sectoral indices seeing more than 1% decrease in value while stocks from Basic Resource, Retail & Bank sectors saw some level of gains with all three sectoral indices up by more than 0.70% on the day. At the end of the day, the three most watched German indices DAX, MDAX and TECDAX were down by 0.28%, 0.13% & 0.66% on the day.

While expectations for Sino-U.S. trade talks seeing positive outcome gave the market bullish boost at the start of the week and the same had been priced into the market, a lack of further headlines from same resulted in the update losing its hold over price rally. Cues from the international market and a bit of risk-averse investor sentiment following three consecutive sessions of decline in global equities resulted in dovish sentiment taking a better grip in equity’s price rally influencing mixed price action in the Asian market today. Further, caution ahead of ECB MPC update is also expected to weigh down action in the European market and this was visible in the dovish price action of DAX futures in the international market. DAX futures was down by 0.25% ahead of the Frankfurt market opening which combined with visible reluctance among investors to place major bets ahead of ECB update is likely to influence Dovish opening. But depending on the tone of forward guidance DAX could trade in red across the day or see positive rebound post ECB interest rate decision update.

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