The DAX index has made a spectacular recovery in the past few days as investors continue focusing on corporate earnings. The index, which is made up of the top German companies, rose to a high of €13,587, which was the highest level since June 13th. It has risen by more than 10% above the lowest level this year. The index is still about 17% below the YTD high.
German earnings
The DAX index has been in focus recently as many German companies publish their results. On Wednesday, BMW, the giant automaker, said its earnings drop by 31% in the second quarter to €3.4 billion. It warned that the rising costs and energy squeeze was having a major impact. It was also hit by the lockdowns in China. Other automakers like Volkswagen and Mercedes published weak results.
Meanwhile, the Zalando share price rose by more than 7% after the company published strong results and forward guidance. Merck published strong results, helped by the stronger US dollar. The other top companies that will publish their earnings are Beirsdorf and Lufthansa.
The DAX index is also reacting to results from the United States. Companies like Airbnb and PayPal delivered strong results. These results helped the main indices like the Russell 2000, Dow Jones, and S&P 500 have all rallied.
At the same time, the index is reacting to the rising because of the weaker euro. The EUR/USD price has fallen by more than 10% this year. Similarly, the closely watched EUR/CHF price has fallen by more than 7% from its highest point in May while the EUR/GBP has also dropped. In most cases, many DAX index companies benefit when the euro declines.
DAX index forecast
At InvestingCube, our goal is to help investors make better decisions. This is why our technology and trading team created the S&R indicator. In the past few years, the indicator has had a success rate of over 85%.
As shown below, it has a bullish outlook for the DAX index. It’s initial target level of €13,510 has already been hit. Now, it estimates that the DAX 40 index will continue rising as bulls target the next key resistance level at €13,800. The stop-loss for this view is at €13,020. Subscribe to InvestingCube’s S&R indicator for more trading signals.
