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DAX Index Daily Price Forecast – German Equities To Experience Positive Headwinds From Asian Market

By:
Colin First

Dax likely to trade range bound with positive bias as Asian equities saw relatively positive price action amid cautious investor stance ahead of US NFP.

DAX Friday

Germany equities were lower at the close on Thursday, as losses in the Pharmaceuticals & Healthcare, Insurance and Chemicals sectors propelled shares lower. At the close in Frankfurt, the DAX declined 3.48% to hit a new 52-week low, while the MDAX index declined 3.14%, and the TecDAX index fell 2.69%. Declining stocks outnumbered rising ones by 643 to 78 and 57 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was up 20.55% to 24.29 a new 6-month high. European stocks ended sharply lower on Thursday, marking their worst one-day performance since June 2016 as Banking, oil and technology stocks led the decline influenced by combination of factors such as slumping oil prices, concerns about global economic growth and the arrest of a high-profile Huawei executive aggravating the resurfaced U.S.-China trade-war fears.

Asian Equities Trade Positive on Wall Street Journal Headlines

Asian shares fought to sustain the slimmest of recoveries on Friday amid speculation the Federal Reserve might be “one-and-done” with U.S. rate hikes, while oil fell anew as producers bickered over the details of an output cut. The mood in risk-asset markets brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December. Meanwhile falling US benchmark T.Yield is dampening investor sentiment as many analysts are now starting to speculate that flattening of the yield curve that we are currency seeing indicates that the Fed is nearing the end of a tightening cycle and rate cuts may even be on the horizon.

Investors now await US NFP data which is believed to be key factor in determining if the economy is indeed slowing faster as inflationary pressure remains limited owing to sharp fall in oil price. As market heads into European hours on last trading session of the week investors remain cautious owing to key markets across Europe experiencing worst session in 2½ years yesterday. DAX futures trading in international market is down by 0.20% ahead of European market hours which indicates bearish price action may continue in German stock market today as well. DAX index has been highly influenced by international cues and global equity market performance across this week’s trading session and the trend is expected to continue today as well despite solid fundamental support as visible from macro data. DAX is expected to trade range bound today with possibility for index to close in either direction as major Asian indices show slightly positive price action while investors remain cautious ahead of US NFP data for clues of Fed rate hike and forward guidance.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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