DAX Index May 2022 Prediction

• Germany’s DAX ended the week beyond 14,000 points.
• The inflation rate hit an ATH for another month.
• Finland to join NATO.

DAX index jumped on Friday to close the week beyond 14,000 points. That advance emerged even with investors digesting escalating inflation plus the plunge in euro-region industrial production. Federal Statistical Office reported Germany’s Consumer Price Index gained 7.4% in April (Y/Y). Moreover, inflation touched an ATH for another month.

ECB (European Central Bank) officials trust inflation will likely extend higher than forecasted, and as with the entire of Europe, increasing inflation threatens the German economy. They confirmed further rate hikes, but the bank declared a focus on monetary stability.

Another pessimistic update in the euro area’s industrial production declined by 1.8 percent between March and February and lost 1.2 percent within the European Union. Meanwhile, the focus remains on the Russian war on Ukraine, with tensions between western nations and Russia fueling the risk-averse attitude.

Volodymyr Zelensky of Ukraine urged the international community to consider Russia’s threat of deploying nuclear weapons. Meanwhile, Finland declared plans to join NATO and drop the neutral stance, whereas Sweden considered similar moves.

Russian Deputy Chair Dmitry Medvedev stated that Russia would use retaliatory procedures over Finland’s move toward NATO. The conflict between Russia and Ukraine triggers supply chain problems for multiple companies. Commodity and raw materials saw ballooning prices since this invasion, escalating an already-high inflation

Meanwhile, the United States confirmed increased LNG (liquid natural gas) exports to Europe to decrease the EU’s reliance on Russian energy. Nevertheless, embargoing Russian gas would mean challenges to many production firms in Germany.

Lanxess CEO Matthias Zachert stated that gas embargoing would mean catastrophic effects on the German chemical industry, triggering shutdowns of most sites using gas while other plants would need output reduction.

Technical Analysis

Germany’s DAX recovered from the lows seen at the start of the week, closing the week near 14,027 pts. Meanwhile, losing the support at 13,500 would see the index targeting 13,000 or lower. Meanwhile, a hike past 14,500 would target the resistance at 15,000.

Final Thought

DAX Index recovered from lows seen early on the week. However, the Ukraine war escalating might trigger sudden plummets. Finland confirmed plans to join NATO, and Dmitry Medvedev warned that such a move would see Russia taking retaliatory steps.

Editorial credit: viewimage / shutterstock.com