Dow Jones, DAX 30 & ASX 200 Price Outlooks:
- The Dow Jones will juggle easing quarantine restrictions and soaring unemployment
- The DAX 30 may look to larger risk trends and the pace at which the European reopens
- Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities
Dow Jones Forecast
Outlook: Bearish
The Dow Jones enjoyed a moderately strong performance last week as investors grappled with the possibility of a negative Federal Funds rate. The prospective decline in rates was laid against a backdrop of soaring unemployment as Friday’s non-farm payrolls report revealed the sharpest employment decrease on record. Still, the potential for lower rates alongside a gradual reopening of the US economy proved sufficient catalysts for an opportunistic Dow Jones.
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It could be argued, however, that the Dow’s ascent is slowing as it has failed to establish a fresh high despite slowing coronavirus cases, an easing in quarantine restrictions and an accommodative Federal Reserve. With that in mind, further strength may require another string of positive developments or bullish themes – but with a relatively calm economic calendar, the Dow may be left grasping for influence. With price showing signs of topping out in the shorter-term, the prospect of a brief trip lower is not out of the question.
Dow Jones Price Chart: 4 – Hour Time Frame (February – May)
DAX 30 Forecast
Outlook: Neutral
The DAX 30 also has a relatively sparse economic calendar apart from a flash GDP reading this Friday. The data for both Germany and the Euro Area will provide crucial insight for investors looking to ascertain the depth of economic despair in the region.
Since Germany has already challenged the ECB’s stimulus program – arguing German taxpayers will end up on the hook – a growth reading beneath expectations could spark calls for further easing and more resistance from German lawmakers. While the shorter-term implications may be minor, each skirmish between the ECB and Germany will work to undermine the European Union’s fragile existence.
ASX 200 Forecast
Outlook: Neutral
Similarly, upcoming Australian employment data will shed light on the ASX 200. As it stands, unemployment in Australia has been relatively contained compared to the United States, which could see a surprise reading seriously undermine sentiment. Until the data is delivered, the ASX will likely track other equity markets and broader risk trends. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
ASX 200 Price Chart: 4 – Hour Time Frame (February – May)
--Written by Peter Hanks, Analyst for DailyFX.com
