DAX Index Fundamental Analysis – week of September 11, 2017

The stock markets around the world have been in a form of choppy trading over the last few months. The buyers do not want to give up on their holdings and hence we do not see much of selling happening in the markets and thats why even the corrective moves have been quite shallow and met with some quick buying. On the other hand, the buyers do not want to commit themselves too much considering that global risks continue to dominate the headlines.

DAX in Tight Range

While it was the Brexit vote that dominated the second half of last year, the last few weeks have been dominated by the news and the tension in the Korean region with North Korea regularly threatening the US with its missile tests and this has increased the risk for its neighbours like Japan and South Korea as well. This has been putting a lot of pressure on the stock markets and the DAX index is also under pressure from these sequence of events.

But for the European stock markets like the DAX, there is an additional reason to feel apprehensive as the ECB has clearly pointed towards tapering of the QE in the near future and every positive economic data has been drawing them closer and closer to tapering leading to a curious case of how the stock markets correct even when the incoming data is positive for the Eurozone. For the DAX index, it is locked in a tight range mainly between the 12000 and 12350 region and this has been the case over the past few weeks.

This ranging and consolidation in the DAX is likely to last in the coming week as well as the focus for the week would be on the US and the UK with the euro in the background. The fact that Draghi was slightly bearish in his press conference has buoyed the DAX but that has not been enough to help it break through its range and the upcoming week is also likely to have more of the same as Germany awaits the upcoming elections as well.