DAX Index Turns Choppy As Geopolitical Events Dominate

The DAX index is almost back to the highs of its range as the index pushed towards the 12300 region and traded above that region for a brief while before it corrected towards the end of the day and finished below that region. It is likely that the index would continue to be choppy in the short term as the traders and investors search for direction.

DAX Choppy

The risk sentiment has taken a hit in the recent times due to the threat of a global trade war and also due to the geopolitical developments in Syria as well but surprisingly, we are seeing the European stock markets moving higher at these times. The main reason for this move is likely to be the fact that the economic data from the Eurozone has not been as good as it was initially expected to be and also based on the promise that it had held out towards the end of the year. This has caused a lot of pressure on the stock markets including the DAX.

The worry was the the better data would cause the QE to be ended sooner and this would affect the buy side of the DAX. But over the last few days, with the data failing, there were hopes that the QE would not be ended as soon as it was expected by many of the traders. This pushed the index towards the highs of the range. But towards the end of the day, the ECB and Draghi continued to infuse hope that the economy was doing very well and that the ECB would hope that the economy would meet all the targets set by it, keeping the doors open for an early end to the QE.

This brought back the pressure on the index and that is why we saw the DAX correct lower towards the end of the day. Looking ahead to today, we do not have any major economic news or data for the day and hence it is likely to be a quiet day of consolidation within the range.