DAX Index Price Forecast – German DAX To Open Flat & Move Range Bound As Geo-Political Woes Limit Possibility For Upside Move

Germany equities were lower at the close on Thursday, as losses in the Pharmaceuticals & Healthcare, Media and Telecoms sectors propelled shares lower. At the close in Frankfurt, the DAX fell 0.54%, while the MDAX index fell 0.37%, and the TecDAX index fell 0.63%. Declining stocks outnumbered rising ones by 434 to 267 and 81 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was up 7.75% to 15.58. German & Spanish CPI data and HICP data released yesterday were worse than forecast which provided the initial negative market sentiment in European market hours. This was further followed by uncertainty surrounding Italy’s budget plans pushing the government’s borrowing cost to multi-year highs which greatly affected investor sentiment and pushed key equity markets across Europe to turn red for the day. Adding to these woes reemerging concerns over Turkey’s currency crisis further triggered typical safe-haven flows which resulted in investors pulling out money from equity markets.

Geo-Political Woes Inspire Negative Sentiment in Equity Markets

Meanwhile equity markets on other side of Atlantic also turned bearish on new concerns that the U.S.-Chinese trade dispute will intensify. Stock markets and major government bond yields have risen in recent weeks on hopes that a global trade war could be averted, particularly as leaders of the United States and Canada expressed optimism they could reach a new North American Free Trade Agreement by Friday. However, on the prospect that a new round of U.S. tariffs on Chinese goods may likely take effect in September. Donald Trump has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week, Bloomberg News reported. This caused Wall Street to crash for the day with all key indices trading negative across American hours and closing bearish for the day.

The influence from Geo-political events in EU & Europe and renewed woes on trade wars resulted in key Asian markets such as China, Japan, Hong Kong and Singapore trading negative on last trading session of the week. However DAX futures which traded in international market ahead of European market hours has taken to slight upwards movement indicating possibility for positive opening of DAX index for the day. While macro data pertaining to Germany has been negative so far suggesting range bound momentum during today’s market hours with high possibility of negative sentiment prevailing among investors, market now is on lookout for Eurozone CPI and employment data along with French and Italian CPI & HICP data. If macro data turns out to be positive today, investor sentiment in Europe may see a positive change boosting equity markets across Europe and this could help DAX close in Green for the day. On the flip side a negative macro data outcome could result in steep downward movement during today’s market hours.