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DAX: German Stocks Attempt To Stabilize

By NAGA (Michalis Efthymiou)Stock MarketsJul 04, 2022 09:16AM ET
www.investing.com/analysis/dax-german-stocks-attempt-to-stabilize-200626646
DAX: German Stocks Attempt To Stabilize
By NAGA (Michalis Efthymiou)   |  Jul 04, 2022 09:16AM ET
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The DAX saw mixed movement during today’s European Session with both an attempted bullish and bearish trend. So far, we have not seen an impulse waveform and hold. Today the US stock market is closed for Independence Day, and economists were eager to see if European stocks would perform better while other markets were closed.

In the second quarter of 2022, the German index lost 17%, its worst performance since the banking crisis 15 years ago. The price action over the past month has declined by 12.55%, and today's price is at a slight decline measuring 0.19%.

The price so far has not been able to form enough bullish movement to form anything more than a minor retracement in the larger trend. The price over the past month has only continued to form lower lows and lower highs. Traders are now looking to see if the asset can break through the latest and lowest support level of 12,616.

DAX price chart.
DAX price chart.

The DAX is not the only stock-based index to have witnessed declines; the CAC has also declined by 8.5%, and the Spanish IBEX 35 has declined by 6.92%. The downtrend in European stock is essentially a domino effect of analysts' fears about a possible recession due to the continued rise in inflation in Germany and the EU as a whole.

In addition, the Eurozone is also predicted to gradually increase interest rates, which can potentially lower investment appetite. Inflation in the Eurozone for June rose to 8.6% from 8.1% a month earlier. However, analysts have advised that inflation is mainly related to fuel costs.

The bond market, in turn, is experiencing mixed results similar to the bond market in the US over the past week. Since the middle of last month, a downward correction has continued, and the yield on popularly followed Germany 10-Year bonds fell to 1.2265% from 1.7620% at the end of June, and the yield rate on global Germany 20-Year government bonds declined to 1.515%. The fact that both bond yields and the stock market have simultaneously declined has worried investors and has further indicated individuals are readying for a recession.

Lastly, investors are slightly more cautious about the EU due to the geographical, political, and economic connections between the region, Ukraine and Russia. The EU has continued looking at ways to lower Russian oil and gas dependency. Over the past week, there had even been reports that Russia may cut gas to the EU. Both outcomes would have a drastic impact on the German economy as well as the stock market.

The growth leaders in the index are RWE AG (OTC:RWEOY) which increased by 5.25%, ZALANDO (OTC:ZLNDY) by 4.77%, Airbus Group (OTC:EADSF) by 3.00% and Sartorius AG by 2.94%. The largest price declines are being seen with Infineon (OTC:IFNNY) Technologies AG, which declined by 3.47%, Deutsche Börse AG by 3.23%, and Deutsche Bank AG (NYSE:DB) which declined by 3.19%.

Over the coming days, investors are likely to be monitoring the regional PMI figures being released tomorrow, the economic outlook report scheduled for Wednesday as well as comments made by the European Central Bank.

Disclaimer: CFDs are complex instruments with a high risk of losing money rapidly due to leverage. Many retail client investors lose money when trading CFDs with this provider.

DAX: German Stocks Attempt To Stabilize
 

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DAX: German Stocks Attempt To Stabilize

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