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DAX Index Price Forecast – DAX Expected To Open Gap Down Owing To Risk Aversion in Equity Markets

Germany equities were higher at the close on Friday, as gains in the Technology, Basic Resources and Pharmaceuticals & Healthcare sectors propelled shares higher. At the close in Frankfurt, the DAX rose 0.57%, while the MDAX index added 0.29%, and the TecDAX index climbed 1.20%. Advancing stocks outnumbered falling ones by 444 to 234 and 97 ended unchanged on the Frankfurt Stock Exchange. The DAX volatility index, which measures the implied volatility of DAX options, was down 4.27% to 14.78. Renewed trade war fears has dampened risk sentiment in equity markets and EURO – the shared currency used in European market took a serious hit on news of Trump’s plans to proceed with tariff’s despite trade talks with China which resulted in China commenting that they would pull out of talks in case US govt goes through with tariff implementation.

Trade War Cues Affect Major Asian Equity Markets Causing Heavy Declines

Most Asian share markets slipped on Monday as investors awaited official confirmation from USA on implementation of tariffs on Chinese goods. Liquidity was thin with Japan on holiday, while Hong Kong markets opened as normal after a super typhoon brushed the city on its way to landfall in China’s Guangdong, the country’s most populous province. All major Asian indices such as Singapore’s FTSE STI, Hong Kong’s Hang Seng and China’s Shanghai Composite are down by more than 0.60% as a senior administration official told Reuters that US Govt will likely impose 10% tariffs on additional Chinese goods on Monday and a retaliation from China could push trade wars further which would greatly affect both volatility and momentum in Forex and Equity markets alike.

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With Asian indices trading down, European markets are expected to open bearish on trade war cues from Washington and China and negative investor sentiment in early hours of Asian market session resulting in risk aversion market scenario with funds moved from equity market to safe haven instruments. DAX Futures trading in international market is down by 0.26% ahead of German market hours indicating signs of gap down bearish opening on DAX index based on market performance in similar situations in near past. With soft euro also providing bearish cues to equity markets, DAX is expected to open negative and take downtrend movement across today’s market hours.

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This article was originally posted on FX Empire

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