DAX Index Fundamental Analysis – week of August 7, 2017

The DAX index spent much of the week within a tight range similar to the trading that we had seen in the previous week. What this does show is that the index seems to be preparing for some larger move in the weeks to come and hence tightening itself into a coil before pushing in a specific direction and this is likely to keep the traders interested as they look for volatile times ahead.

DAX Looking to Consolidate Further

There was not much news last week to drive the stock markets and though the US stock markets continued to trade in a strong and steady manner for much of the week, the European stock markets refused to tag along. There was a brief while in the middle of the week when the index did rush higher on the back of strong economic data but the move higher was heavily sold into and the index was back where it started the week.

We expect the tapering talk from the ECB to have a tight control on the DAX and only when more details begin to emerge later on in the year will we understand the true extent and effect of the tapering and its possible that the investors are holding back at this point of time in the hope that more details would emerge. We had many minor economic data being released from Germany over the course of last week but they have had little effect on the DAX index which seems to be waiting for the tapering progress and also for the elections in Germany which is to be held in September.

Looking ahead to the coming week, we have the trade balance data and the final CPI data from Germany. What we have always noted is that the economic data from Germany has always tended to be strong and maybe due to the fact that it is always expected to be so, it seems to have little effect on the DAX index which follows the general path of the Eurozone developments and also the markets from the other parts of the world. We expect this consolidation and ranging to continue in the coming week as well.