The German Dax index is approaching the end of the stock market year, close to its highest. It recently rebounded to horizontal support in the 15,000 point area – what’s next for the German stock index?
Many investors have hoped for a stock rally during the latter part of the stock market year. The so-called Santa Claus rally is an investment bias that calls for a rally in stocks in the period after Christmas and until the end of the stock market year.
Bias or not, this year, the US stock indices have rebounded. The rise triggered a similar price action in other parts of the world, such as Germany. The main German index, the Dax, has rebounded from the horizontal support seen in the 15,000 area and is now threatening to hit a new high for the year.
Dax has undergone great changes from 30 to 40 constituents. 10 new companies have been added to the index in the hope of modernizing it and aligning it with its peers in other parts of the world.
What are the forecasts for next year? Will the Dax index perform well in 2022?
Bullish bias above 15,000 points
The technical outlook looks bullish as support at 15,000 holds. In 2021, this area was critical for Dax index investors, and will remain so in 2022.
On the other hand, a fall below 15,000 should trigger more weakness towards the 14,000 pivot level. This is a level that has offered strong resistance in the past and may offer firm support. in the future.
The ECB’s accommodative monetary policy to help European equities
Monetary policy is very important to the stock market. Currency accommodation favors equities and the ECB is committed to staying accommodative in 2022. This contrasts sharply with what is happening in other parts of the world, such as the UK, where the Bank of England has risen the interest rate in December. Thus, European equities are supported by the accommodative position of the central bank.
Smooth power shift in Germany to help the stock market in 2022
One of the reasons the Dax index did not rebound in 2021 like stocks in the United States, for example, was the uncertainty surrounding the German federal election. Now that the elections are behind us and a new government is in place, the smooth transition of power bodes well for the stock market in 2022.