DAX Index Daily Price Forecast – DAX to Trade in Red on Declining German Bond Yields

European equities yesterday saw a sharp decline in all major stock exchanges across Europe. Equities declined for the second consecutive trading session yesterday on bearish cues from multiple fronts. The main bearish factor that contributed to the decline was German 10-year government bond yields remaining in negative zone. Also, dovish cues from Wall Street and Asian equities and declining US government bond yields contributed to overall risk-averse trading session resulting in dovish price action across the day. However, declines were limited as German macro data updates saw positive outcome and eased risk-averse investor sentiment.

Mixed Cues Likely To Limit Downside Price Action Albeit Prevalent Bearish Bias

The bearish sentiment in the European market was clearly visible in the German stock market which is considered as a symbolic representation of a scenario in Europe. All major benchmark indices in Frankfurt stock exchange closed in red but declines were well below 0.60% in all indices. The three major German indices DAX, MDAX & TECDAX were down by 0.15%, 0.38% & 0.54% on the day. Out of the total 778 stocks trading in the exchange, 484 stocks closed in red while 69 stocks remained unchanged at the end of the day. As per data on the performance of sectoral indices in Frankfurt stock exchange, 13 out of 18 close in the red. Stocks from utilities, consumer & cyclic , constructions sector saw high gains while stocks from Technology, Food & Beverage, Retail and Media sectors saw high loss.

Asian equities saw mixed activity with a high level of bullish bias as U.S. T-Yields rebounded post hitting lowest since 2017 during yesterday’s American market hours. However, there is some level of caution as investors fear the possibility of a recession in the U.S.A. owing to recent fed update and dovish US macro data. Dovish cues from Wall Street also added to bearish sentiment in the global market. However, improved risk appetite saw DAX futures trading in the international market take positive price action ahead of European market hours up 0.10% on the day. Change in Brexit control dynamics also improved risk appetite in European markets. DAX is likely to see a neutral opening on cautious investor sentiment but dovish action is likely in case of dovish European macro data and pressure from German long term bond yields which remains in negative area.

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