DAX Index Daily Price Forecast – DAX To Trade Bearish on Cues From Asian markets & European Political Woes

DAX is expected to continue yesterday’s bearish price action influenced by cues from overseas markets.
Colin First
DAX Friday
DAX Friday

Germany equities were lower at the close on Thursday, as losses in the Food & Beverages, Construction and Technology sectors propelled shares lower. At the close in Frankfurt, the DAX lost 0.04%, while the MDAX index fell 0.62%, and the TecDAX index declined 0.65%. Declining stocks outnumbered rising ones by 394 to 308 and 74 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was down 3.09% to 20.09. The DAX index lost ground in the early Thursday session as German CPI was dovish as expected and was further pressured by post ECB conference comment from Mario Draghi in which he cautioned against risks for economy being skewed to downside resulting in bearish close for the day.

Draghi’s Comments Inspire Caution Among European Investors

Asian shares tumbled on Friday after China reported a set of weak data, fanning fresh worries of a sharp slowdown in the world’s second-biggest economy and leaving investors fretting over the wider impact of a yet unresolved Sino-U.S. trade dispute. While Italian budget concerns are easing and yield differentials between IT-DE bonds are declining providing fundamental support for Euro, safe haven demand is on the rise in Europe as President of the European Commission Jean-Claude Juncker announced early today morning that the European Union will begin publishing all information concerning a no-deal Brexit scenario and their preparations for such an event will begin on December 19th after EU representatives refused further negotiations with UK on Brexit deal during EU summit yesterday.

Although hopes of progress in U.S.-China talks and cheap valuations are supporting the market for now, investors remain cautious ahead of US FOMC update as they await forward guidance. US equities closed in red yesterday after US President Donald Trump commented that he would like US Fed to stop their rate hike plans. DAX futures trading in international market was down by 0.74% ahead of European market opening suggesting that Frankfurt stock market could see bearish price action today. European market is also weighed down by Brexit proceedings which combined with bearish cues from international markets are likely to influence DAX to trade on bear’s path today.

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