Home Forex Markets Analysis of the German DAX40 index trend: The International Monetary Fund (IMF) once again lowered its economic forecasts

Analysis of the German DAX40 index trend: The International Monetary Fund (IMF) once again lowered its economic forecasts

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Analysis of the German DAX40 index trend: The International Monetary Fund (IMF) once again lowered its economic forecasts

The chain reaction caused by the military conflict between Russia and Ukraine continued to impact the political and economic situation in Europe. At the same time, inflation and recession caused by high oil prices lingered, and European stock markets were depressed. Today, the IMF lowered its European and global economic forecasts. The European stock market represented by the German index is the most Injuried.

As a representative index of European stock markets, the German DAX40 index leads the sentiment of the entire European stock market to a certain extent. As the staged rebound of the German index is blocked, more and more risk events are gathering, and the outlook for European stock markets is bleak.

First, the impact of the protracted military conflict between Russia and Ukraine. The Russian-Ukrainian military conflict has lasted for more than five months, and there is no possibility of a ceasefire except for the recent agreement on the Ukrainian grain transportation issue. Russian Foreign Minister Sergei Lavrov warned the United States and Europe last week that Russia could expand its military activities if it supplies Ukraine with long-range weapons. Geopolitical risks continue to drive oil prices up, and high oil prices have seriously pushed up European inflation and threatened the European economy. Funds have flowed out of Europe in large numbers for several months. The United States and the European Union continue to introduce new sanctions against Russia, which is likely to force Russia to bow. However, high oil prices are generating income for Russia, and the European Central Bank has raised interest rates for the first time in 11 years due to price pressures, further exacerbating the possibility of European economic recession. The political situation in Italy and other countries is unstable, and the situation in Russia and Ukraine has led to more uncertainty still fermenting.

Second, the market is concerned about the Fed raising interest rates and the possibility of a US recession. The United States is also affected by the impact of oil prices on prices, and Biden’s visit to Saudi Arabia has had little effect, and the inflation problem has forced the Federal Reserve to take action. A number of U.S. data suggest that the U.S. economy is slowing, with weakness in consumer data being the most concerned. Market speculation that the Fed will still slow rate hikes due to the situation, but will need to wait for Powell’s confirmation, which makes this week’s FOMC meeting even more important. The Fed’s stance on inflation and recession will affect other central bank decisions, and ripple through the global economy and financial markets. The decline in U.S. stocks is worse than the decline in European stocks.

Then, today’s report from the International Monetary Fund (IMF) drew attention.

The IMF released the update of the “World Economic Outlook Report”, predicting that the world economic growth rate will slow from 6.1% in 2021 to 3.2% in 2022, 0.4 percentage points lower than the forecast in April; the world economic growth rate is expected to be 2.9% in 2023 , 0.7 percentage points lower than the April forecast.

Specifically, the U.S. economic growth in 2022 and 2023 is expected to be 2.3% and 1.0%, respectively, down 1.4 and 1.3 percentage points from the April forecast.The euro zone’s economic growth forecast for this year and next is 2.6% and 1.2%, respectively, down 0.2 and 1.1 percentage points from the April forecast.

The IMF noted that the world economy faces multiple downside risks, includingThe Ukraine crisis led to a sudden halt in European gas imports from Russia, inflation was more difficult to control than expected, and tightening global financial conditions exacerbated emerging market and developing economies’ debt problemsWait. If these risks materialize and inflation rises further, world economic growth will slow to 2.6% in 2022 and 2.0% in 2023.

This is the agency’s second downward revision after lowering its world economic growth forecast in April.

Adding to the woes of an already weak and sensitive European economic outlook could affect long-term funds’ focus on European assets.

The trend of the German DAX40 is also showing signs.

On the whole, after losing 14800, the German index has turned to an overall decline, and the short-term situation has fallen into a low level of 13500-12500. Although the index forms a triple bottom at the 12500 line, the suppression of 13500 has not decreased at all. Once it falls below 13000, it still faces another decline. The risk of breaking 12500, and then continued to drop, entering a larger bear market decline.

To maintain the view of shorting the German index on rallies, refer to the resistance at 13400 and 13800.

(by Arthur)

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