DAX index forecast ahead of factory orders report

The German DAX index rose on a weekly basis and closed the week at 15,688 points. Eurozone economic expansion exceeded expectations in the third quarter, but rising inflation has become a concern for investors.

Eurostat’s first flash estimates show that euro area gross domestic product rose 2.2% in the third quarter, which is higher than expected. The European Union’s GDP grew 2.1% in the third quarter, driven by better-than-expected growth in Italy and France.

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European inflation was confirmed at 3.4% year-on-year in September, but the European Central Bank left monetary policy unchanged this week as expected. President Christine Lagarde said inflation would likely be temporary and the European Central Bank would maintain its accommodative policy for as long as needed.

The EU’s consumer price index hit a 13-year high of 4.1% yoy in October, while the German consumer price index jumped to 4.6% yoy on same month. According to Christine Lagarde, inflation will come down next year, as she also said that no rate hikes are expected throughout 2022.

Germany’s GDP grew 1.8% in the third quarter, below the expected 2.2%, but according to the German Ministry of Economics, the outlook for industry remains positive.

Results for many large companies have given the third quarter results a good start, and investors will remain focused on the third quarter results season as many companies have yet to release their reports.

Next week, BMW, Fresenius, Zalando, Vonovia, Deutsche Post are among the companies due to publish their quarterly results. On the other hand, the global supply chain crisis is a serious problem for Germany due to its dependence on exports.

Almost 50% of companies said they lost sales due to supply issues, and many large companies cut production of some of their most profitable products.

It is important to mention that Daimler increased its quarterly profit despite a 30% drop in Mercedes-Benz sales due to the chip crisis. Craig Erlam, an analyst from Oanda, said:

We will continue to see this two-way price action in the markets, driven by a clash between strong earnings and optimism on the economic outlook, contrasted with the risks of inflation, interest rates and prices. Energy.

Germany will release factory orders for September next week, which could significantly influence the DAX index in the near term.

16,000 points represent resistance

Data source: tradingview.com

The German DAX index continues to perform well and if the price exceeds 15,800 points, the next target could be 16,000 points.

Strong support stands at 15,000 points, and if the price drops below that level, that would be a strong “sell” signal, and the next target could be around 14,500 points.

Summary

The German DAX index rose on a weekly basis, German GDP grew 1.8% in the third quarter and, according to the German Ministry of Economics, the outlook for the industry remains positive. Germany will release factory orders for September next week, which could significantly influence the DAX index in the near term.

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