DAX forms bearish head and shoulders pattern

THE DAX 40 Index, which tracks the 40 largest and most liquid German companies listed on the Frankfurt Stock Exchange (FSE), started 2022 strongly by hitting a record high in January. However, the success was short lived as it has been on a downward spiral since. Despite a slight rebound in March, it has suffered the most compared to other regional indexes, with its year-to-date return down by 10.65 per cent at the time of writing (Apr 11).

From a macro point of view, the main narratives that are clouding the sentiments of the index are the Russia-Ukraine war, rising inflation and higher interest rates.

With regards to the ongoing conflict, the European Union (EU) has imposed a series of sanctions on Russia over its invasion of Ukraine, resulting in Germany having to fork out 40 per cent more on energy in March as compared to the previous year.