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DAX Index Fundamental Analysis – week of November 20, 2017

November 19
15:07 2017

The DAx ended the week below 13000 which points to further weakness in the coming week. It was not a good week for the index as it continued to weaken through the course of this period and basically continued the fall from the previous week. The bulls did try their best to pull the index out of the rut by initiating bounces on any sort of correction but that was not enough for them to pull the DAX out of the fall.

DAX Falls on Weak Global Cues

What has been curious and special about this fall is the fact that the index continued to move down despite the fact that the fact that the data from Germany and the Eurozone as a whole has been pretty strong. Over the last week, we had the economic expectations and other data from Germany and all of these data were pretty robust, which is usual for Germany. But the main thing that seemed to worry the investors was the lack of pick up in the inflation.

The inflation figures continued to show a dismal reading and this was also mentioned by Draghi in his speeches last week. The slew of good incoming data has not led to an increase in inflation and this has been making it difficult for the investors to invest with confidence. In a way, this could turn out to be good in the long term as without the inflation picking up, the ECB cannot think of putting an end to the QE and this would mean an availability of abundance of funds for the stock markets.

Looking ahead to the upcoming week, we believe that the bulls would clearly be under pressure as the index has closed below the 13000 region. The global stock indices of major countries are also showing some weakness, including those in the US, and this is beginning to have a bearish effect on the DAX. We also have a speech from Draghi apart from the manufacturing PMI data and the business climate data from Germany which should keep the traders interested in the coming week.

This article was originally posted on FX Empire

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