DAX Index Daily Price Forecast – DAX To Trade Range Bound on Risk Off Market Sentiment

DAX index is expected to trade range bound with bearish bias on cautious investor sentiment.
Colin First

European equities last week closed on positive note supported by broad-based risk on investor sentiment. However, gains were limited owing to investors caution ahead of Brexit Plan B vote and dovish comments from European Central Bank Monetary Policy Committee Update. Key political and economic issues in the Euro area are yet to be resolved. Further worry of escalating tensions relating to trade war is expected to keep economic growth subdued to great extents providing a dovish medium-term outlook. At the close on Friday, Frankfurt stock exchange closed on a positive note with most major sectoral indices closing in Green. Stocks from Basic Resources, Technology and Media sectors made most gains as per data from sectoral indices performance.

Cautious Ahead of Key Political Events Plunges Market Into Bear’s Territory

Out of total 778 stocks trading in Frankfurt exchange, 502 stocks closed in green. All three major indices in Frankfurt exchange closed in Green with DAX, MDAX, and TECDAX up by 1.36%, 1.06% & 0.99% on the day. DAX index hit a new one month high during Friday’s trading session. In major global equity markets, Asian indices opened positive for the day on cues from US Wall Street which closed in Green on Friday as US Government was temporarily re-opened for three weeks. Risk appetite was further improved on news that US Fed is planning to stop its balance sheet shrinking activities which are viewed by many as the Fed’s stance to avoid rate hike during 2019. While market opened in Green, most major stocks and indices soon turned red as investors took a cautious stance as they await key political events to be addressed this week.

Starting from Brexit UK parliament vote, Sino-U.S. trade talks to US NFP data and US Fed Monetary Policy Committee update where Fed members are expected to officially comment on investors predictions following recent headlines. This cautious resulted in investors holding back from placing major bets and booking some profits on previous session gains. This investor sentiment is also expected to reflect in the European equity market and plunge most major stocks and indices from key European markets into bearish price action. DAX Futures trading in the international market was down by nearly 0.30% ahead of German market hours. Being trade-dependent by nature and highly susceptible to cues from the international market, DAX is expected to open in red and trade range bound with bearish bias across the day.

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