Tapering weighs on DAX

The German equity market is offside as tapering fears outweigh a strong ZEW report, which measures investment sentiment.

The DAX is trading at 9144, down 0.15%, as global equities feel the pressure ahead of an anticipated reduction of the $85 billion bond-buying scheme tomorrow. This fall is in spite of the ZEW report which came in at 62 in December, the highest reading since April 2006 and smashing the expectation of 55.3. The ZEW report for the eurozone as a whole came in at 68.3 in December, following a consensus for a reading of 60.9.

The decision not to trim the stimulus package in September took some traders by surprise, and they are clearly determined this will not happen again. Also, since September the unemployment rate in the US has dropped to 7%, and the US central bank has stated that a sizeable reduction in the jobless rate would lead to tapering.

Equities are likely to continue to be quiet ahead of the announcement from the Fed. If a reduction in the bond-buying scheme is announced, we could see the market head towards the 9000 level.

Germany 30

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.