DAX Index Daily Price Forecast – Dovish ECB Update To Pressure German Equities Into Bear’s Territory

European equities yesterday opened on a cautious note and most indices and equities in all major European indices traded in red, but activity was limited for majority of the day as investors were cautious while awaiting European central banks interest rate decision update. This also involved reluctance in place new major bets which greatly limited price action in the early half of the day. Yesterday’s ECB updates were in stark contrast to last month’s update displaying a clear bearish tone. ECB reduced growth and inflation forecast for 2019 and also announced that their TLTRO plans are set to start from September 2019 which is perceived as a highly dovish move given the fact that ECB ended their major Quantitative Easing program just last December.

Investor Sentiment Shows Clear Dovish Inclination Today

These factors led to Euro seeing sharp declines in the global market and all major European equities closing on a dovish note with a sharp loss at the end of the trading session. In Germany’s Frankfurt stock exchange all major benchmark indices closed in red at the end of trading session hinting at highly bearish tone prevalent in the market. Out of 778 stocks trading in the international market 458 stocks closed in red while 86 ended unchanged. As per data on the performance of sectoral indices in the exchange, 14 out of 18 sectoral indices closed in the red. Stocks from Banks, Food & Beverage, Basic Resource & Automobile sectors saw high levels of loss down more than 2% each while stocks from Financial Service, Telecom, Utilities, and Transport & Logistic sector closed in green at the end of the day with varied levels of gains.

The three most-watched German benchmark indices DAX, MDAX & TECDAX were down by 0.60%, 1.02% & 0.70% decrease in value at end of the trading session. Asian equities today morning saw a sharp drop over disappointing Chinese trade data and dovish cues from Wall Street equities. Meanwhile, Brexit talks continue to remain at standstill and hint at disorderly Brexit also weighing down the common currency and European economy. The market still seems to be reeling from aftereffects of yesterday’s dovish ECB update and this is visible from DAX futures performance in the international market which was down by more than 0.50% ahead of Frankfurt market opening hours. This suggests that a mix of factors which are currently exerting a high level of dovish pressure on investor sentiment is likely to influence DAX to open in red and trade with bearish bias across the day.