DAX 40 forecast: Turbulent time for the index
It has been a rocky road for German index Deutscher Aktienindex, also known as the DAX 40 (DE40), since the Russia-Ukraine war began.
When making a DAX 40 forecast, analysts not only have to take into consideration geo-socio-political events but also individual company performance. Several companies in the DAX 40 portfolio have significant exposure to US stock markets.
While rising US stocks can boost the DAX, geopolitical tensions in Europe have obstructed growth. Read on for a look at the latest news and check out our DAX 40 prediction.
Russia-Ukraine war weighs on DAX 40
The DAX 40 forecast is affected by Russia’s invasion of Ukraine. The DAX 40 index price chart for this year shows that the price dipped to 12,426.7 points on 7 March as war intensified. However, the index picked up, boosted by the largest overhaul in its history when 10 new companies were added to the index.
So far, the index has not been able to reach anywhere near its record high of 16,278 points hit on 5 January or surpass pre-war highs.
As the conflict continues to rage, several controversies have emerged concerning powers in Europe. At the end of May, Russia’s President Vladimir Putin warned France’s President Emmanuel Macron and Germany's Chancellor Olaf Scholz against increased arms supplies to Ukraine. Putin indicated that it could lead to further destabilisation.
A spokesperson for the German chancellor said that both Macron and Scholz had “urged an immediate ceasefire in Ukraine and a withdrawal of Russian troops from the country”.
Amidst the possibility of a global food supply crisis and no signs of peace, much is uncertain. The US government is providing support to Ukraine, sending sophisticated arms and a $40bn aid package.
The DAX 40 forecast historical price trend illustrates how Germany supplying arms to Ukraine created several highs and lows throughout April and May. June saw the price rise for a while, but then crashed to 13,345 points on 8 June.
Brexit and the coronavirus pandemic have affected German stocks in the past few years. The Organisation for Economic Co-operation and Development’s (OECD) economic outlook has lowered its 2022 global growth forecast to 3% from 4.5%.
Germany is heavily reliant on Russian oil and gas. The EU’s embargo on Russian crude oil imports and the spike in energy prices could become a drag on the German economy.
Additionally, the European Central Bank (ECB) plans to put an end to its asset purchase programme in June and expects a rate hike in July.
DAX 40 forecast
In September 2021, the DAX 40 index upgraded from an index of 30 companies by adding 10 more: Airbus, Porsche, Puma, Siemens Healthineers, Symrise, Sartorius, Brenntag, Hellofresh, Qiagen and Zalando. The overhaul helped the index rise to over 16,000 points.
As of 14 June, a DAX 40 technical analysis showed the index trending lower. The 50-day simple moving average (SMA) reached a low of 14,085 – lower than the 200-day SMA of 15,012. The war continues to weigh on the index.
The Relative Strength Index (RSI) was at 34.85. Moving average convergence divergence (MACD), Average Directional Index (ADX) and Bull/Bear Power all indicated neutral.
Analyst Francesco Bergamini from Investing.com commented on the index’s future on 11 June, saying:
Zain Vawda, a strategist with DailyFX, stated that “market sentiment drags DAX further down”, noting:
According to Trading Economics’ DAX 40 forecast 2022, as of 14 June, the index was expected to trade at 13,282.92 points by the end of the second quarter of 2022 and at 11,943.89 points in 12 months’ time. The analyst does not make a DAX 40 forecast for 2025 and 2030.
The Economy Forecast Agency think the DAX 40 will close at 11,929 points by the end of December 2022 and 13,453 points by December 2023.
Before making investment decisions, always keep in mind that predictions from algorithm-based forecasting services and analysts can sometimes be wrong. Their forecasts are based on past trends and might not consider many other facts that can affect the market. You should always do your own research to form an outlook for the index.
FAQs
Is DAX 40 a good investment?
Whether DAX 40 is a good investment for you or not will depend on your portfolio composition, investment goals and risk profile. Different trading strategies will suit different investment goals with short or long-term focus. You should do your own research. And never invest what you cannot afford to lose.
Will DAX 40 go up?
As of 14 June, price predictions for the DAX 40 are gloomy, with war in Ukraine and inflation leading many forecasters to be cautious. However, analysts’ forecasts can be wrong. Forecasts shouldn’t be used as substitutes for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Should I invest in DAX 40?
Trading or investing on an index in a volatile environment could be beneficial given its wide array of companies. However, it is important to keep in mind that volatility increases risk. Make sure that your trading decisions are based on your own research. Keep in mind that past performance is no guarantee of future returns. And never invest more than you can afford to lose.
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