DAX index forecast ahead of renewed COVID-19 restrictions

Germany’s DAX index has advanced on a weekly basis and closed the week at 16,159 points. Many big companies reported strong third-quarter earnings results, and according to the German Economic Ministry, the outlook for the industry remains positive.

Strong corporate earnings keep the market in a positive mood for now, but the rising inflation, covid pandemic, and the world’s supply chains crisis create nervousness.

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The German Consumer Price Index jumped to 4.6% YoY in October, and according to data published by the national statistical agency Destatis, Germany’s index of producer prices for industrial products rose 3.8% on a monthly basis in October.

The world’s supply chains crisis represents a serious problem for Germany because of its dependence on exports, and nearly half of Germany’s economic output depends on exports of cars, machine tools, and other goods.

Many big companies reported they had lost sales because of supply problems, and it is important to say that the German economy is particularly vulnerable to shortages of key parts and raw materials.

The German Economic Ministry reported that it expected this effect to be temporary while healthy order books give a reason to expect strong recovery impulses from the industry.

Germany’s GDP grew by 1.8% in the third quarter, but increasing concerns over renewed COVID-19 restrictions in Europe also represent an issue for economic growth.

Austria imposed a nationwide lockdown from this Monday, and according to Germany’s Health Minister Jens Spahn, Germany is also not ruling out a new lockdown. Minister Jens Spahn added:

The country is facing “a national emergency,” in the past two weeks, the number of new cases has jumped by more than 60%. The government is stepping up supplies of vaccines, with five million jabs ordered for doctors’ offices next week to meet the demand for booster doses.

German health authorities reported 48,640 new coronavirus infections on Friday, which was the second-highest value since the pandemic’s beginning.

Minister Jens Spahn repeated calls for people to get booster jabs, but concrete measures will likely wait until a next Thursday.

15,500 points represent strong support

DAX index continues to trade above 16,000 points, and if the price jumps above 16,300 points, the next target could be at 16,500 points.

On the other side, if the price falls below strong support that stands at 15,500 points, it would be a strong “sell” signal, and the next target could be around 15,000 points.

Summary

The DAX index continues to trade near record highs, but the rising inflation, covid pandemic, and the world’s supply chain crisis make investors nervous. The country has been facing “a national emergency,” in the past two weeks, the number of new cases has jumped by more than 60%, and according to Germany’s Health Minister Jens Spahn, Germany is not ruling out a new lockdown.

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