What’s next? – DAX 15.06.17

DAX

The DAX futures were 0.15 percent lower in early trading on Thursday, trading around 12,807 points, following a widely expected rate hike by the Federal Reserve in the prior session.

The US regulator rose interest rates for the second time this year by 25 basis points to a range between 1.00 and 1.25 percent, adding that another hike later this year is still possible.

The German index broke the 12800 mark on Wednesday and extended gains until the 12930 level, where it found strong resistance and was forced to the downside.

The index received support from downbeat economic data in the United States, including the consumer price index and the retail sales for May. Both came in below market expectations.

Some investors thought these reports could persuade Fed policymakers not to raise interest rates or at least limit the number of rate hikes this year. However, Fed Chairwoman Janet Yellen sent the opposite message to the markets, implying the regulator stays true to the initial plan.

The German market was already closed by the time of the FOMC statement and therefore, today we would see the reacting on full extension. A weak open is likely across Europe as traders digest the FOMC meeting results and tune themselves for other policy meetings from the Bank of England and Bank of Japan later in the day.

Higher interest rates make investing in the United States more competitive for market players, which could be interpreted as lower cash flowing into the DAX or other markets.