DAX Index Daily Price Forecast – DAX To Trade With Bearish Bias On Cues From Wall Street

Dax index is expected to trade with bearish bias owing to investors caution ahead of major events in US and bearish cues from last nights performance in wall street.
Colin First

Germany equity markets yesterday closed on a positive note as prevalent risk appetite in European equity markets provided some level of fundamental support. Out of 778 stocks trading in Frankfurt stock exchange, 381 closed in green while 87 stocks closed unchanged at End of yesterday’s session. According to sectoral indices data from the exchange, stocks which saw a high level of positive action were from Food & Beverage, Utilities and Chemicals sector respectively. Investors in European markets seem open to risk on trading despite cautious tone remaining prevalent in the market. They believe that owing to regular retail activity affecting price action in the broad market, stocks from Utilities, Food  & Beverage sector will have relatively less impact from Sino U.S. trade war and hence can act as safe haven assets in short term.

Investors Caution To Continue Pressuring Market

All three major indices in Frankfurt stock exchange closed positive yesterday. At the end of day DAX, MDAX and TECDAX were up by 0.08%, 0.44% & 0.31% respectively. While positive action was prevalent in broad market investors caution ahead of yesterday’s UK parliament session limited gains in European markets. US Wall Street saw its major indices and key stocks take bearish nose dive owing to escalating tensions on Sino-U.S. trade talks ahead of the two-day session set to begin today. Bearish cues from U.S. Wall Street and investors caution ahead of today’s US FOMC meeting resulted in major equity markets seeing bearish price action during Asian market hours. While Japanese, Shanghai & Singapore exchanges saw their equities decline, Hong Kong and Australian equity markets saw positive price action. Brexit Chaos following yesterday’s UK Parliament session is also likely to weigh the European market today.

Today’s calendar is set to see key international political events as well as high impact macro data from European markets. Aside from the major events mentioned above, European market hours will see the release of German CPI data and GFK Consumer Confidence Climate data which could also affect price action in German equity markets. Investors are expected to tread the market carefully and hold back from placing major bets ahead of key events scheduled to occur during American market hours. DAX futures trading in the international market was down by nearly 0.40% ahead of Frankfurt market opening. This combined with cautious investor tone in broad market and cues from international market suggests that DAX is likely to trade with bearish bias across the day but the chance for sharp declines are limited as risk on investor sentiment is still high in European markets.

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