GER40

The German DAX 40 index (originally Deutscher Aktienindex), or simply DAX, is a blue-chip index tracking the performance of 40 largest stocks of Germany. This is a large cap index that hosts 40 stocks traded on the Frankfurt Stock Exchange, including Adidas, Airbus, Allianz, BASF SE, Bayer, Bayerische Motoren Werke (BMW), Daimler, Deutsche Bank, Henkel, Siemens, SAP, Puma, and others. The index was created by Deutsche Börse as DAX 30 in 1988, but was complemented with ten more large cap companies in 2021. The index is calculated by Qontigo, a member of Deutsche Börse group. The companies listed on the index can be found at https://qontigo.com/products/dax-en/ along with the index methodology.
The index has some specific features: - It is considered to be an indicator of Germany economic performance as it hosts the largest stocks from different sectors of the national economy. It is one of the most popular indexes to trade;
- German and Eurozone macroeconomic data affect the index, as Germany is the Eurozone’s economic engine. Rising GDP, employment, retail sales, business activity (PMI, ZEW, Ifo business activity indicators) all support the index. If this data is negative, it will likely result in a declining index;
- The DAX 40 index is heavily affected by the performance of the S&P 500 index as the European economy is traditionally and largely exposed to the United States. Its exposure to the Chinese economic performance is also growing, but not to the same extensive extent as that of the U.S.;
- The index is very sensitive to the actions of the European Central Bank (ECB) as the monetary policy of the European monetary regulator directly affects the business performance of German companies. Rising interest rates, borrowing cost, declining monetary supply cuts, corporate profits, and consumer demand affect the index. Monetary tightening puts pressure on the index, while easing monetary policies support the index;
- High inflation in Germany and in the Eurozone also put pressure on the index. If inflation is far above the 2% target, it may lead to additional monetary tightening by the ECB. If inflation is below the target, retail sales are likely to expand, which supports the index;
- DAX is a risky asset and reacts to risk appetite and investors’ sentiment. Positive developments in the global economy and geopolitics support the index, while uncertainties, stress, and geopolitical tensions put pressure on the index;
- The index could be traded via CFDs, futures, or designated ETF’s;
- The index is linked to the European stock market’s opening hours, but futures and CFD trading on the index continues mostly throughout a 24/5 basis, excluding weekends. So, the index may open with a gap if something very important has happened during a weekend.