DAX index forecast ahead of factory orders report

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Oct 30, 2021
  • European Union's GDP grew by 2.1% in Q3
  • DAX advanced on a weekly basis
  • Germany will publish factory orders for September next week

Germany’s DAX index has advanced on a weekly basis and closed the week at 15,688 points. The eurozone’s economic expansion surpassed expectations in the third quarter, but rising inflation became a concern for investors.

According to Eurostat’s preliminary flash estimates, the eurozone’s gross domestic product grew 2.2% in the third quarter, which is above expectations. The European Union’s GDP grew by 2.1% in the third quarter, driven by better-than-anticipated growth in Italy and France.

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European inflation was confirmed at 3.4% YoY in September, but the European Central Bank left its monetary policy unchanged this week as anticipated. President Christine Lagarde said that inflation would likely be temporary, and the European Central Bank would maintain its accommodative policy for as long as necessary.

The EU Consumer Price Index reached a 13-year high of 4.1% YoY in October, while the German Consumer Price Index jumped to 4.6% YoY in the same month. According to Christine Lagarde, inflation will decrease next year, while she also said that no rate hikes are to be expected throughout 2022.

Germany’s GDP grew by 1.8% in the third quarter, below the 2.2% expected, but according to the German Economic Ministry, the outlook for the industry remains positive.

Results from many big companies provided a strong start to third-quarter earnings, and investors’ focus will remain on the third-quarter earnings season because many companies have yet to publish their reports.

Next week, BMW, Fresenius, Zalando, Vonovia, Deutsche Post are among the companies scheduled to report quarterly results. On the other side, the world’s supply chains crisis represents a serious problem for Germany because of its dependence on exports.

Almost 50% of companies reported they had lost sales because of supply problems, and many big companies scaled back production of some of their most profitable products.

It is important to mention that Daimler increased its quarterly profit despite a 30% drop in Mercedes-Benz sales due to the chip crisis. Craig Erlam, an analyst from Oanda, said:

We’re going to keep seeing this two-way price action in the markets, driven by a clash between strong earnings and optimism over the economic outlook, contrasting with risks of higher inflation, interest rates, and energy prices.

Germany will publish factory orders for September next week, which could significantly influence on DAX index in the near term.

16,000 points represent resistance

Data source: tradingview.com

Germany’s DAX index continues to perform well, and if the price jumps above 15,800 points, the next target could be at 16,000 points.

Strong support stands at 15,000 points, and if the price falls below this level, it would be a strong “sell” signal, and the next target could be around 14,500 points.

Summary

Germany’s DAX index has advanced on a weekly basis, Germany’s GDP grew by 1.8% in the third quarter, and according to the German Economic Ministry, the outlook for the industry remains positive. Germany will publish factory orders for September next week, which could significantly influence on DAX index in the near term.

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