DAX Long Term Analysis
The DAX has historically proven to be a picture of strength for the German economy, and indeed for greater Europe. Between March 2016 and March 2021, the German Stock Index improved from a level of 9,694 to 14,157. As with all indices, there have been corrections along the way, but the overall trend is higher highs and higher lows. From left to right on a chart, the bullish performance of the DAX is apparent. Consider the 1-year performance of the DAX Index through March 2021 at 21.89%, compared to the FTSE 100 Index at 3.27%, the CAC 40 Index at 13.52%, the EuroStoxx 50 PR at 14.85%, and the IBEX 35 Index at -0.28%. Viewed in perspective, the DAX was the strongest performing European stock index during the pandemic by a long margin. While it certainly pales in comparison to the NASDAQ composite index (+50.66% over 1 year), and the S&P 500 index (+29.26% over 1 year) over the same period, it has been a stellar performer. Back in May 2020, the German parliament passed a massive, and unprecedented aid package designed to shore up the German economy against the ravages of the coronavirus. The lower house of parliament approved a €750 billion aid package, valued at $814 billion at the time. The government of Chancellor Angela Merkel signed the historic measure, which was the first time in almost 8 years that Germany took on additional debt. The German government also suspended the debt ceiling – a crucial borrowing limitation – midway through 2020.
The extra €156 billion increase in government debt for 2020 was earmarked as part of the aid package. The measures were passed in the lower house of parliament, and moved up to the upper house of parliament, known as the Bundesrat to be voted into law. Stimulus measures tend to evoke positive reactions from traders, as evidenced by bullish speculation with DAX CFDs trading. Like the United States, Germany moved swiftly to pass legislation designed to protect the economy, the workers, and families from the fallout of the coronavirus. The government immediately intervened to mitigate against losses. Social distancing rules and regulations were also put into place in the Federal Republic of Germany. Government ministers and legislators went as far as suggesting the nationalisation of German enterprises to prevent them from going into bankruptcy. As Europe’s largest economy, Germany eschewed draconian measures to implement nationwide lockdowns the likes of which were seen in Italy and across other parts of Europe. However, the government implemented bans on gatherings of 2+ people, with social distancing measures put in place. The 6 feet social distancing rule required in the US was reduced to 1.5 m in Germany. The DAX hit a multi-year low in March 2020, but rebounded strongly, despite a slight dip again in November 2020.
Recent Trends with the DAX Index
The Germany DAX 30 stock market index collapsed spectacularly, albeit briefly, at the onset of the pandemic in March 2020. The premier index plunged from just under 14,000 to around 8300 on March 17, 2020. Since then the index has enjoyed strong and consistent gains. The components of the DAX (February 2021) include the likes of:
Infineon Technologie, Daimler, Covestro, Deutsche Post, Siemens, Thyssenkrupp, Merck, BASF, BMW, Continental, HeidelbergCement, Adidas, Deutsche Wohnen SE, Linde, Vonovia, Volkswagen, Deutsche Bank, RWE, Henkel, Deutsche Telekom, Deutsche Boerse, Munich RE, Allianz, SAP, Beiersdorf, E.ON, Fresenius Medical Care, Lufthansa, MTU Aero Engines AG, Fresenius, and Bayer. The strongest performers for the year (Feb. 2020 – Feb. 2021) include the following five: Infineon Technologie, Daimler, Covestro, Deutsche Post, and Siemens. The weakest performing companies in the DAX 30 stock market include: Fresenius Medical Care, Lufthansa, MTU Aero Engines AG, Fresenius, and Bayer. Trading activity on the DAX 30 is largely determined by European economic indicators such as PMI data for the Eurozone, interest rates, unemployment rates, and inflation figures. The pandemic sent the value of stocks plummeting in March 2020, only to rise sharply in the year since. A minor correction took place in late October 2020, but a period of bullishness has followed.
The Germany DAX 30 reached an all-time high of around 14,000, before retreating. Over the past 12 years, the DAX has largely gained year-on-year, with several exceptions. The DAX 30 Index historical annual data since 2008 indicates the following:
- 2008 – average closing price 16
- 2009 – average closing price 57
- 2010 – average closing price 20
- 2011 – average closing price 01
- 2012 – average closing price 43
- 2013 – average closing price 81
- 2014 – average closing price 85
- 2015 – average closing price 10 961.50
- 2016 – average closing price 10 195.65
- 2017 – average closing price 12 434.31
- 2018 – average closing price 12,267.00
- 2019 – average closing price 12,109.96
- 2020 – average closing price of 12 324.61
- 2021 – average closing price 13,881.04
The DAX 30 enjoyed strong gains of 29.06% in 2012, 25.48% in 2013, and 25.5% in 2019. In 2020, the DAX improved by 3.55%, and in 2021, it is up to 2.00% (February 2021). Traders at AvaTrade UK have access to a wide range of charts, graphs, economic indicators, and other tools to successfully place trades on the Germany DAX 30.
Key DAX Facts
- The DAX 30 Index from Germany is a blue chip equity index consisting of 30 of the largest companies in Germany. Many are globally recognized, with names such as Adidas, Merck, and Volkswagen featured.
- The value of the DAX is representative of the broader German market and the performance of the DAX can be used as a way to compare and forecast the performance of its components.
- Those interested in speculating on the value of the DAX can use the CFDs provided by AvaTrade South Africa (SA) to do so easily after opening an account. Many of the individual constituent companies are also available as CFDs at AvaTrade SA.
Trading DAX 30
The DAX 30 index is the benchmark Stock Market Index (known as the Deutscher Aktienindex), in German Stock Indices and overall economic performance of the country, which lends itself to investor sentiment towards German equities. The DAX-30 trades on the Frankfurt Stock Exchange of the Deutsche Börse Group, which is the 10th largest in the world, and third largest in Europe in terms of total market capitalisation of listings. The DAX is capitalisation weighted like France’s CAC 40, and measures the performance of the 30 largest and most publicly traded on companies in Germany, which represent 80% of the total German market capitalisation.
What is the DAX? | AvaTrade Tutorial
The DAX 30, also known as the Germany 30, is one of the world’s most closely watched global indexes. It is comprised of 30 of the largest blue chip companies listed on the Frankfurt Stock Exchange. It is the German equivalent of the Dow Industrials in the U.S. or the FT 30 in the U.K. Because it is composed of such a small number of companies it is not necessarily considered to be representative of the broader German economy as a whole. It is considered a measure of the strength of the German stock market however, and is frequently quoted by financial services and news organizations around the world.
The index began with a base value of 1,000 on 30 December 1987, and over the years the DAX has been through many mergers, bankruptcies, takeovers and restructures which brought about an unstable outlook and negative investor sentiment. This was changed, as during 2003 to 2007 the DAX saw upward trends that were record breaking for a consecutive 1,587 days, and enjoyed values exceeding of 8,105 peaks. Subsequently, as the cycle of most indices trading the DAX saw a pitiful fall in the 2009 ‘credit crunch’ and ended its peak performance at 3,580. However, the index was not down for long, as since the crash in September 2013, the DAX experienced a major peak and a record high of 8,736, following a 1,000-point gain. The global popularity of German companies that form the DAX 30 index, have been the backbone of the German economy. The DAX name and reputation has been responsible for carrying these companies in their solid growth and globalisation.
DAX 30 Index composition
The DAX 30 was formulated in 1987, and as mentioned measures the performance of 30 of the most profitable companies in Germany. For companies to be included in the DAX 30 index they need to be listed on the Prime Standard (Frankfurt Stock Exchange), where a minimum of 10% of the listed company’s shares are to be held in public hands as well as a number of other criteria to be considered to become a constituent part of the index. Reviewed on quarterly basis by the Board of the German Stock Exchange (Deutsche Börse) and according to basic criteria these constituents can be altered. A company is excluded for the index when it’s rank is 45 or lower, this is from criteria that is driven from a free float market capitalisation or a low order book volume. On the other hand, if a company’s rank is 25 or better than the lower ranking company, the latter will be replaced with the fast entry of the better ranked company.
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How the DAX 30 Index is Calculated
The free-float methodology is used in the calculation of the DAX 30 Index. This methodology uses only shares that are readily available for sale and leaves out those that are unavailable, like the shares held by governments. The DAX 30 is a market capitalization weighted index. This means the companies with greater market capitalization also have a greater impact on the overall value of the DAX 30 trading hours. However, the maximum weight of any listed company is capped at 10%.
Factors that influence the overall index price
As with most indices, CFD’s, Stocks, commodities, etc. the DAX, like any other instrument, reacts directly to factors that occur globally. Events such as economic breaking news, political unrest, even natural disasters. These are mainly due to import / export activities that will influence the demand in each company’s industrial sector, that in turn affects the index as a whole. Keeping abreast of economic data from Germany as well as most of Europe is a smart trading move when you are trading DAX index. Following the DAX live charts during DAX index trading is another method to understand the DAX CFD trading trends, especially when there are announcements that include: Job creation, unemployment rate, GDP figures and other economic benchmarks.
Constituents of Germany’s DAX 30 Index
There are a total of 30 companies included in the DAX Index, and those include these 10 globally recognized firms as of September 2020:
- Adidas AG:
Adidas is a designed of sports apparel, best known for its line of athletic wear and sneakers.
- BASF SE:
BASF is the world’s largest integrated chemical companies, with business operations spanning more than 80 countries in the world.
- Bayer AG:
Bayer is a life sciences company and the developer of the world famous Bayer Asprin. As one of the largest pharmaceutical companies in the world it also has business spanning consumer healthcare products; agricultural chemicals, seeds and biotechnology products.
- BMW AG:
Bayerische Motoren Werke AG, or more commonly BMW, is a luxury automobile and motorcycle manufacturer well-known by its slogan ‘The Ultimate Driving Machine’.
- Deutsche Bank AG:
Deutsche Bank is one of the world’s largest banks, with operations that span the globe. It has struggled with profitability over the past decade however as it has never truly recovered from the 2008 global financial crisis.
- Infineon Technologies AG:
Infineon Technologies is a semiconductor manufacturer founded in 1999 as a spin-off of Siemens AG.
- Deutsche Telekom AG:
Deutsche Telekom is one of the largest integrated telecommunications companies in the world and is best known in the U.S. by the brand T-Mobile.
- Merck KGaA:
Merck is one of the world’s largest pharmaceutical and health-care companies with operations in 66 countries around the world.
- Siemens AG:
Siemens AG is a multinational conglomerate and the largest industrial manufacturing company in Europe. The primary company divisions are Energy, Healthcare, Industry, and Infrastructure & Cities, which represent the main business activities of the company.
- Volkswagen AG:
Volkswagen, typically shortened to VW, is an automobile manufacturer famous for its iconic “Beetle” cars and VW busses.
DAX 30 Trading information
- The DAX trading hours are Monday to Friday 6:01 – 19:59 (GMT)
- The DAX moves in increments of 0.50
- The margin requirement is 2%
- Maximal available leverage is
- The minimum trade size is 0.1 unit
- The DAX is priced in Euro
Advantages of Trading the DAX 30 Index
There are a number of advantages to trading the DAX 30. These include the long trading hours of the Frankfurt stock exchange, which is open for nearly 9 hours each day, the high level of liquidity offered by this global index, and the tight trading spreads traders enjoy. Traders have been known to comment on the ease with which trading trends can be spotted on the DAX, which helps to explain the popularity of DAX trading. Traders will notice the price charts of the DAX often show clear technical patterns, offering a good opportunity to capture emerging trends.
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DAX 30 Trading Main FAQs
Should I trade the DAX 30?
If you have any interest at all in the German economy, or in the multi-national corporations that make up the DAX 30, then the answer is yes. With the German economy the largest in the European Union, and often called the engine of growth for Europe, trading the DAX 30 is like making a bet on the strength or weakness of not only Germany, but of the broader European Union. The DAX provides traders with the perfect opportunity to speculate on the broader economy rather than focusing on a single company or sector.
What’s the best strategy to trade the DAX 30?
First of all, traders should look to trade the DAX 30 when its liquidity are highest. This tends to be at the start and end of the day, so planning trades to enter and exit the market during the first and final hours of the trading day is a good start. Any of the standard technical trading strategies can be used when trading the DAX 30, including moving averages, Bollinger Bands, RSI, MACD, and more. Support and resistance levels are also important when analyzing potential entry and exit points.