Stagnation in Dax discourages investors, as concern for possible reversal and financial losses grows
The German stock market index, the Dax, is currently navigating through a period of uncertainty, with experts warning of potential declines and trend reversals. According to Jochen Stanzl, chief market analyst at CMC Markets, the Dax could see a drop of up to ten percent, with a decline to the 21,000/22,000 point region possible if a correction is extended. This uncertainty stems from factors such as geopolitical tensions, global trade agreements, and the uncertain outlook for tariffs and geopolitics. The recent price movements in the Dax, including the new record high of July 10th, have raised concerns. A confirmation of a bull trap could occur if the Dax falls below 24,000 points, potentially leading to a trend reversal with somewhat extended price losses. The figures from the balance sheets will reveal whether the leading stocks in the Dax can compensate for the weakness of other sectors. The future development of the Dax will depend strongly on these leading stocks. Current geopolitical developments, including global market sentiment affected by international events and defense sector trends linked to a possible supercycle in military spending through the 2030s, are influencing expert opinions on the DAX. Economic indicators and central bank policies also play a significant role in the evaluation of the Dax. Stanzl also suggests that the earnings season could bring one or two disappointments due to the uncertainty surrounding tariffs, geopolitics, and the rising euro. He warns that realistically, uncertainty is likely to persist even after August 1st, and investors may be expecting too much from a deal with the USA. On the currency front, the European common currency showed a slight strengthening on Monday morning, with one euro traded at 1.1642 US dollars. Conversely, one dollar cost 0.8590 euros on the same day. The price of North Sea Brent crude oil stood at 69.17 US dollars per barrel at 9 AM German time on Monday. Stanzl states that the European Central Bank will not lower interest rates on Thursday, and he suggests that the current mood on the stock exchange may be overly optimistic, with a cooling-off expected in the short term. In conclusion, the Dax is facing a challenging period, with geopolitical tensions, trade policy, and economic indicators all playing a role in shaping its future. Investors will be closely watching the earnings season and the balance sheets of leading stocks in the Dax to gauge the index's potential for recovery or further decline.
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