DAX Index Daily Price Forecast – Healthy Risk Appetite In Market To Support Positive Price Action in DAX

DAX is to trade positive across the day on high-risk appetite in market and cues from the international market even if macro data outcome is worse than expected.
Colin First
DAX Tuesday

European equities yesterday saw strong bearish price action on most major European markets. Given the fact that 3/4th of markets in Asia is on holiday till Wednesday, trading activity in a real sense begun only in European market hours. While European equities opened in green on positive cues from U.S. Wall Street, disappointing European Purchase Price Index and Sentix investor confidence data resulted in investor sentiment turning cautious. Weak macro data renewed concerns of an economic slowdown in Euro area economic activity and this resulted in mixed performance among major equities and indices with most major markets closing in red yesterday. German equity market was one of those which closed in red yesterday.

Dovish Macro Data Hurt Investor Sentiment Yesterday

Out of total 778 stocks trading in the exchange, 367 stocks closed in red while 83 closed unchanged at end of trading session. The three major indices in Frankfurt exchange saw mixed outcome as risk appetite was high despite caution among investors on concerns of an economic slowdown. At the close of yesterday’s trading session, DAX was down by 0.04% on the day while MDAX and TECDAX were up by 0.19% & 1.61% on the day. As per data on sectoral indices performance from Frankfurt stock exchange, stocks from Software, Pharmaceuticals, and Financial service sector saw gains while losses from stocks in Basic Resources, Telecoms and Utilities sectors led to the decline of benchmark index DAX.

Given the fact most major Asian markets were closed for the day, the remaining markets saw positive price action supported by bullish cues from Wall Street and high-risk appetite among global investors. DAX futures trading in the international market were up by more than 1% ahead of Frankfurt market opening. Positive cues from U.S. & Asian markets and bullish price action of DAX futures in the international market suggests that German equities are likely to open positive and trade in green across the day. However disappointing readings in Euro area PMI’s and retail sales data scheduled to release later today could lead to some sideways price action limiting the scope for an upside move, while positive outcome will continue to underpin market bulls across the day.

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