GER40

This week’s US inflation data may impact Wall Street but will likely have limited implications for European indices. But one factor that is certainly weight on sentiment on this side of the pond is political uncertainty in Germany. Against this backdrop, our DAX forecast is turning bearish in the short term, especially if the German index now breaks a key support area that it was testing at the time of writing.

As we approach the release of Germany's inflation rate figures on November 12, 2024, economists and market watchers are keenly anticipating what these numbers will reveal about Europe's largest economy. Especially after last week!

German stock index DAX (DAX 40) current market conditions. Overview of the stock price movement and potential support and resistance points: Current Market Status The DAX is currently trading at 19,433.67, showing a positive movement of 1.14% or 218.19 points from the previous close. This indicates a bullish sentiment in the market today.

Hannover Rück is positioned for growth, with strong demand in reinsurance and an expected full-year net income target of €2.1 billion. The company’s strategic use of retrocession and insurance-linked securities (ILS) aids in expanding capacity. Continental shows improved profitability with a projected adjusted EBIT margin of 8.9%, despite a sales decline. Strong cost management and price adjustments helped drive earnings, particularly in the Automotive and Tires sectors.

This has been an extraordinary week in global politics and economics, and it is safe to say that we will not see a week like the one that was any time soon, at least not planned.

The dismissal of Finance Minister Christian Lindner by Chancellor Olaf Scholz has led to the collapse of Germany’s ‘traffic light’ coalition, sparking political and economic uncertainty. Lindner’s FDP exit comes just two weeks before the critical 2025 budget vote, with key policy disagreements on climate and economic reform proving too divisive.

With the US election now just one day away, things can turn rapidly across financial markets, particularly because this is turning out to be such a close election and the polls cannot and should not be trusted. Given the fact that the DAX has weakened in the last couple of weeks, this also argues against a sustainable recovery as the prior bullish momentum has been lost.

You would have thought that on the back of a stronger showing from the Eurozone GDP that the DAX and other European indices would have been rallying today. Well, that hasn’t been quite the case as traders digested a deluge of mixed earnings while the handover from China was again not great with the markets there falling. Meanwhile, a technical breakdown means the DAX forecast has turned somewhat bearish in the near-term outlook.

The DAX is still in a dynamic uptrend and reached new highs on 17 October. Since then, a slight consolidation has been taking place in the range between the EMA 20 and the all-time high in order to reduce the overbought market situation.

The DAX was trading slightly lower, down for the third consecutive day, although it was only around 1.5% off from the recently achieved record high. Far from a turmoil, in other words. But equally, the loss of bullish momentum may be a sign that the markets could go in reverse soon.

Today’s German wholesale inflation data pointed to further ECB rate cuts in December, keeping the bullish DAX forecast intact – for now, anyway. However, ongoing weakness in the Eurozone economy, coupled with political uncertainty in the US – with the presidential election now only two weeks away – and not to mention the fact China’s markets don’t seem to be finding a sustainable recovery despite ongoing government stimulus efforts, all point to a potential dop in the coming weeks.