DAX

[Marko Jovicic]

What is the prospect for DAX in the short-term following the latest information released from Germany's Bundesbank? 

Edited May 18, 2020 by Marko Jovicic

[AlexMercer]

Hi Marko, thanks for asking.

I guess you are referring to Bundesbank’s regular monthly report about the overall economic situation. If that’s the case, the bank outlined that it expects the economic activity in the Q2 to disappoint, in comparison to the Q1, which was very much expected. According to their data, Germany’s economy shrunk 4.6% in the last month. 

The much-respected bank said it expects the economy to recover in the closing stages of the second quarter, although there is still “a very high level of uncertainty about future economic developments”. 

“There is currently much to suggest that overall economic developments will move up again in the course of the second quarter as a result of the easing measures and a recovery is under way. This depends, among other things, on the further course of the global infection process and the containment measures taken, but also on changes in consumer and investment behaviour that are influenced by this,” it is said in the monthly report. 

It seems that DAX moved higher on the comment from Bundesbank that it expects the economic recovery to start in the second part of the current quarter. I think we can expect a move towards the next important resistance zone, around 11,300 in the coming days as the global risk sentiment improves.