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DAX Index Daily Price Forecast – Italian Budget Headlines Will Decide Outcome of German Equities Today

Colin First

Germany equities were lower at the close on Monday, as losses in the Technology, Software and Retail sectors propelled shares lower. At the close in Frankfurt, the DAX declined 1.77%, while the MDAX index lost 1.39%, and the TecDAX index lost 3.70%. Declining stocks outnumbered rising ones by 539 to 174 and 71 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was up 1.48% to 17.18. European equities yesterday attempted a modest advance after the opening but finally gave up to fears ending the day in the red, while Wall Street collapsed, amid sharp losses in the tech sector led by  Apple cutting its outlook on mounting worries of slowing demand for iPhone. Asian shares skidded on Tuesday after a rout in tech stocks put Wall Street to the sword, while a sharp drop in oil prices and political risks in Europe pushed the dollar to 16-month highs as investors dumped riskier assets.

News of Possible Tariff on European Auto Market Added To Bearish Market Sentiment

A toxic mix of negative factors have hammered risk assets in the past several weeks, with the October rout in equities leaving global markets in a state of nervous anxiety. Investors have become increasingly nervous recently about a likely peak in corporate earnings growth, softening global demand, faster rate hikes in the United States and a Sino-U.S. trade war. Concerns about a slowdown in China and the Asian region more broadly due to U.S. tariffs on Chinese goods have spooked investors, sparking the largest monthly foreign outflows from Asia last month since August 2011. However Funds returned over the early part of November on hopes that U.S.-China tensions would ease, with the focus squarely on a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping later this month.


Meanwhile headlines that Trump administration is planning to impose tariffs on European Auto market sparked another round of bearish woes in equity market since North American market hours yesterday with EURO hitting new lows clearly indicating cautious investor stance. However mixed equity performance among major Asian indices and uptrend price action in DAX futures in international market ahead of Frankfurt market opening suggests that DAX index will likely open positive similar to yesterday but hopes for any upside move is very limited as overall market sentiment is highly bearish in nature. There is also a possibility of DAX moving range bound with bearish bias during today’s market hours. As European markets continue to be influenced by political issues with lack of progress in Brexit negotiations investors focus is now and Italian budget whose deadline is today and if Italian government submits a budget without any major changes, DAX will likely see a sharp bearish fall during European market hours today.

This article was originally posted on FX Empire