What is the Dax? Overview of Germany’s Stock Market Index
The world economy has experienced a troubled few years. With the covid-19 pandemic causing much distress during 2020 and 2021, the current war between Russia and Ukraine has only added to the turmoil.
Any upheaval affects the large stock markets, and Germany’s has been severely affected by recent events.
The Deutscher Aktienindex – usually shortened to DAX (or DAX 40) – has been unstable since the war began. Why is this, and why is Germany’s stock index particularly affected?
The DAX 40 Explained
The DAX 40 is an important stock market index in world terms. Many of the companies listed on the market are strongly influenced by the US economy, being companies that routinely trade across the Atlantic. Companies such as Porsche, Airbus, Puma, and Siemens – along with six others – were added to what was then the DAX 30 in late 2021. This has also influenced the index.
From a record high of 16,278 points in the first week of January 2022, the market dipped to 12,462.7 points in early March as the war in Ukraine escalate. However, it did pick up as the effect of the ten news entrants was felt but has not come close to the January high. What are the main factors affecting the DAX 40 and the DAX forecast?
Why the Market is Struggling
The DAX forecast is heavily reliant on its links with the USA, and the market in America has also taken a hit lately. The following are some of the major influencing factors on the index:
- The war in Ukraine has destabilised just about all world markets
- Germany is heavily reliant upon oil and gas from Russia
- An EU embargo on Russian fuel and a fuel price spike is problematic
- The coronavirus pandemic and the machinations of Brexit were already influential
- A possible global food shortage has led to government intervention
- The US government is supplying aid and arms to Ukraine to the tune of $40billion.
- Continued aid for Ukraine from Germany and France has exaggerated the uneasy nature of the index.
Each of the above factors – and mainly the fact that there is no sign of peace between Russia and Ukraine – has led to a general sense of insecurity not only in the German stock market, but worldwide. What is the future looking like for the DAX forecast?
What the Future Holds for the Dax
DAX forecast is not a simple task due to the numbers of factors involved and the general uncertainty surround the Russia-Ukraine conflict. This in particular will have an ongoing effect on the index, not least due to the fuel embargo which is set to stay in place for the duration.
The Economy Forecast Agency has said the DAX will drop to 11,929 points by the end of December 2022 and revive to 13,453 one year on. However, these are algorithm-based predictions that use past trends, so cannot be treated with complete accuracy.