Premium analysis by our dedicated team
Feb 27, 2021, 12:11 PM GMT

The DAX is Rushing Towards a Bottleneck

German stocks are struggling to continue driving the existing rally higher in the midst of the latest global developments. As a result of that, the DAX index is still unable to break out above the psychologically significant resistance at 14000.000, after several failed attempts.

The future of the bullish market is jeopardised by shifting investors' sentiment. U.S. Treasury yields recently picked up from their historically low levels, which is raising investors' demand for bonds. This is owing to the fact that higher Treasury yields are making the stock market less appealing to investors. This trend is starting in the U.S. but is extremely likely to spill over to Europe and the rest of the world. Hence, the DAX may be due for another major correction.

Meanwhile, global economic trends also appear to be disadvantaging German stocks. Despite Germany's recently observed recuperation in manufacturing, the services industry continues to be weighed down by the pandemic. This means that the country's broader industry continues to be on track to uneven recovery, resulting in more uncertainty for the German stock market. This trend is further bolstered by the even stronger stabilisation of U.S. manufacturing.

Profit & Loss
Short Term Long Term Net % Gains
+ - + -
0 109 BPS 72 BPS 0
Short Term
+ -
0 109 BPS
Long Term
+ -
72 BPS 0
Net % Gains

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