After a challenging pre-Christmas week, the DAX remained relatively unchanged on Friday, closing up 0.11% at 16,706.18 points. Over the week as a whole, Germany's leading index declined by around 0.3%. The MDax, composed of medium-sized companies, experienced a greater dip, falling by 1.01% to 26,943.60 points.
Many market participants have already wrapped up their yearly activities, leading to a likely decrease in stock market activity as we approach the end of the year. The DAX has seen a significant surge since the beginning of the year, rising by 20%. Despite the pre-Christmas calm, Frankfurt's stock exchange remains an essential indicator of German companies' health and the overall economy.
Insights:
The DAX's mixed performance during the pre-Christmas period was influenced by various factors.
- Robust US Economic Data: The DAX struggled to maintain its position above the 20,000-point mark due to strong US economic data. In December, the ISM Purchasing Managers' Index for the non-manufacturing sector reached 54.1 points, and job openings amounted to 8.098 million units in November.
- Mixed Market Reactions: Despite the robust US data, the DAX displayed resilience, managing a 0.37% increase amidst poor PMI data, which suggests economic contraction. This made it more challenging for the EU to raise interest rates.
- Technical Analysis: Currently, the DAX is neither trending upwards nor downwards. It has higher lows but is losing momentum at similar levels, nearing resistance levels from the previous week.
For the end of the year, expected performance includes:
- Short-Term Forecasts: In February 2025, the DAX is predicted to start at 20,069, with a maximum of 21,612, a minimum of 18,784, and an average of 20,166. By the end of February, the index is expected to be around 20,198.
- Long-Term Forecasts: As we approach December 2025, the DAX is estimated to begin at 24,186, with a maximum of 26,427, a minimum of 22,969, and an average of 24,570. By the end of December, the index is expected to hover around 24,698.
- Market Influencers: Key events such as the release of US job reports, retail sales data, and FOMC minutes will continue to impact the DAX. Economists anticipate December job growth of 160,000 units, which could have a significant impact on the index.
The ECB and the Federal Reserve are also expected to raise interest rates, which could impact the DAX.
However, the market's response to these hikes will be crucial for the DAX's performance. These events and interest rate decisions will shape the direction of the DAX as the year comes to a close.
