Wednesday, 23 August 2017
What’s next? – DAX 23.08.17
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what’s next
DAX
The DAX futures traded 0.25 percent higher at 12,252.5 points as of 07:50 GMT on Wednesday, recovering prior losses as market players looked ahead of European Central Bank President Mario Draghi’s speech at the Lindau Nobel Laureate Meeting, Lindau, Germany.
Draghi opted to defend the role of quantitative easing programs, arguing such measures were part of necessary adjustments to monetary policy in order to face a changing world.
“When the world changes as it did ten years ago, policies, especially monetary policy, need to be adjusted. Such an adjustment, never easy, requires unprejudiced, honest assessment of the new realities with clear eyes, unencumbered by the defence of previously held paradigms that have lost any explanatory power.”
The ECB boss explained that “large-scale asset purchases can ease these [leverage] constraints and increase investors’ risk-bearing capacity, leading to a portfolio rebalancing towards risky assets and to strengthened lending activity for banks.”
The DAX was also supported by upbeat economic data from Germany and the euro zone. German manufacturing and services PMI indexes came in at 59.4 and 53.4 respectively in August, both above market analysts’ expectations.
In the euro zone, the manufacturing PMI index for August was at 57.4, outperforming a forecasted reading of 56.3. The composite index came in at 55.8. The services PMI fell short from an expected value of 54.9.
Strong activity indexes in the euro zone suggest the economy is still expanding and therefore, the European Central Bank counts on more arguments to descale monetary stimulus.
The German benchmark is likely to find strong resistance at 12,250 and in case of a downward correction be limited by the 12,100 mark.
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