Met Traders

Fall of the Dax and Weak German Data

Posted October 14, 2014 James Austin

The DAX (Deutscher Aktienindex (German Stock Index)) consists of 30 major blue-chip German companies including, Adidas, BMW and Deutsche Bank that trade on the Frankfurt Stock Exchange. Recently the DAX has been struggling with reports of weak economic data and the current state of the Euro zone.

The DAX closed down this weekend by 2.4% at 8,788.81 points, its lowest level since October 2013, which is a stark contrast to the record high of 10,050.98 points earlier this year in June. The DAX has been hit hard this week by poor data from Germany, Europe's biggest economy, including data released on Thursday which showed German exports in August had fallen by 5.8% to €92.6 billion, their largest percentage decrease since January 2009. Other reports have shown that industrial output took a big decline in August of 4%, a far bigger decline than the 1.5% predicted by analysts and economists and business confidence in Germany is at a 17-month low. Q2 Gross Domestic Product (GDP) figure for Germany was reported at negative 0.2% and analysts are predicting that Q3 GDP will actually reveal that Germany has re-entered recession. The release of all the data that was so different to expectations in the market led to massive market sell-offs, which was reflected in the DAX. The release of weak economic data and market decline will put even more pressure on the European Central Bank to start a quantitative easing program to help the Euro zone with all the pressure it is facing.

However, with all that is happening to the DAX and Germany, many economists believe that the country will recover quickly and put the decline to `external shocks` such as the recent standoff between Russia and the Ukraine.