DAX struggles to regain momentum

January has not been a particularly positive month for the German index, and this morning’s economic releases have failed to kick-start last year’s drive.

The DAX is still struggling to cope with the 200-plus point fall that it suffered on 2 January, and today’s improving Sentix investor confidence has only nudged the index a few points higher.

The picture for Europe remains split, with the economic data and sentiment surveys showing that Germany is still on course for its targeted recovery. The problems of southern Europe are less clear cut than they were, with Spanish service purchasing managers index figures jumping to 54.2 – their highest levels since before the financial crisis in August 2007.

The next issue that is looming is France; although the central bank was optimistic with its projects towards the end of last year, this optimism has not been backed up by any of the country’s economic releases. Although Germany’s recovery looks to be well founded, France could turn out to be a millstone around its neck. The continuing divergence away from the longer-term support of the 100- and 200-day moving averages raises the question of over-exuberance in 2013.

Could disappointing unemployment figures on Tuesday or soft monthly factory orders on Wednesday be the catalyst needed for more of a corrective pull back? 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.