The DAX index remained steady during the course of the day on Friday and it is expected that the index would open in a strong manner today due to the improvement in the risk sentiment across the globe. This is expected to keep the index well supported during the course of the day which could push the index back above 13000.
DAX Index Likely to Open Stronger
The index had dropped during the course of last week on the back of weak global cues, an increase in risk and also due to the fact that the incoming data from the Eurozone had continued to be weak. Though the weak data from the Eurozone is something that has been going on for the past few months, the index had risen till a few weeks back as the fall in the data would have meant that the QE would continue for that much longer. But this kind of support is likely to be very weak and that is why we have been seeing the index respond to the bad data from last week and we have seen it fall.
We have also seen the index fall lower due to the rise in tension in the Korean region with the US government threatening to cancel the summit between the leaders of the US and North Korea and this has led to a risk off mode in the markets and the index had fallen lower due to that. There was a mini recovery of sorts towards the end of the week but the recovery is as yet incomplete.
Looking ahead to the day, we believe that the index would open in a strong manner today on the back of improvement in the risk sentiment as the leaders of North and South Korea met over the weekend and we also saw that the preparations were underway for the summit between US and North Korea despite statements to the contrary. This has led to a cooling off of the tension in the Korean region which has helped the Asian markets to move higher as we write and this effect should be seen in the DAX as well, when it opens. We believe that the index would rise above the 13000 region once again.