DAX hit by profit-taking

The German equity market is continuing its downward trend as the bulls take a breather.

Frankfurt business district
Source: Bloomberg

The Duitsland 30 is trading at 9855, down 0.2% on the day, after a quiet morning with little corporate and economic news from Germany. Without additional reasons to buy, traders are starting to take their money off the table.

Tomorrow, Germany will release its latest inflation figures, and analysts are expecting an increase of 0.2%. This announcement will give us an indication of what the European Central Bank will do at next Thursday’s meeting. I don’t foresee another interest rate cut in the near future, but if Mario Draghi hints at additional easing in the third or fourth quarter we could head back to towards the 10,000 mark.

If the DAX can hold above the 50-day moving average of 9811, it may stem the selloff. As Chris Beauchamp stated, the 9765 mark is providing support. In the short term the risk is to the downside, but signs of deflation could send the index towards 9940.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.