Xetra DAX Index
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- Metadoro first
The latest inflation data from Germany showed a decline in the average price of goods sold by manufacturers of 14.7% YoY. It is the lowest on record since the beginning of 1949. This may be attributed both to lower cost of electricity and the lack of demand due to slender consumer wallets, pushing down wholesale pricing for durable goods. The latter version looks more likely as Germany's manufacturing activity in terms of PMI (purchasing managers index) plunged below 40 points, the lowest since the pandemic spring of 2020, holding this current anti-record since July.
This data reinforced my thoughts to hold short positions on the Xetra DAX (GER40) index futures. This week, it finally passed its previous technical support area around 15,000. Last Christmas' area of price adjustments below 14,000 is the next possible target, yet probably not limited to. A price discount from summer peaks in Germany's DAX already exceeded 10%, compared to 7.3% for the S&P 500 major barometer of Wall Street. Europe's industrial engine demise led to increasing sell-off even in its blue chip assets, with negative impact of the Middle East violence breakout and China's recovery halt. The European economy is more exposed to this regrettable development than America, which is separated from the epicentre of geopolitical tensions and the flow of migrants.
Xetra DAX Index
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.
Ticker | GER40 |
Contract value | 10 |
Maximum leverage | 1:100 |
Date | Short Swap (%) | Long Swap (%) | No data |
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Minimum transaction volume | 0.1 lot |
Maximum transaction volume | 100 lots |
Hedging margin | 125% |
USD Exposure | Max Leverage Applied | Floating Margin |
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