The German Dax Index is a measure of 40 of the largest companies listed on the Frankfurt Stock Exchange. This index is a good proxy for the stock market as a whole, and the performance of the DAX has been quite good in recent months. It has also surpassed the S&P 500 by a slew of metrics. For example, a large component of its success has been attributed to the lowering of energy prices. That in turn helped ease fears of a potential economic collapse.
While it has recouped much of its lost ground, it is still not quite back where it started. Investors are wary of the prospects of higher inflation and the trade tensions roiling the world’s biggest economy. Despite the fact that the US economy is expanding and China is experiencing a robust growth spurt, there are still plenty of jitters to be had. There is also a looming debt crisis in Greece. But the European Central Bank’s decision to cut interest rates by a quarter point, and the easing of monetary policies in other countries, are not going to end the eurozone’s recession anytime soon.
Fortunately, the European economy is not as shaky as many investors have been led to believe. In fact, the trade dispute, which has already impacted manufacturing jobs in Europe, is a lagging indicator of the strength of the global economy. Even so, there is little to suggest the DAX will fall far from its record highs. A major boost was the passage of a relief package that allows German firms to purchase gas at 80% of its 2021 price, which has alleviated some of the pressure from higher energy costs.
One of the best ways to get exposure to the German DAX is through a DAX ETF. The DAX ETF is a large cap stock ETF that aims to provide investors with exposure to the benchmark. Among the most prominent companies in the ETF’s portfolio are household names like SAP and Siemens. However, the fund has not yet been able to gather a significant amount of assets.
Despite a number of negative headlines, the DAX’s rally has been fairly solid. On Friday, Germany’s 30 retook the Fibonacci level of 12,240. This is a good sign for short-term traders, although the big question remains: will the momentum continue?
As we near the end of the year, the world of equities is set to undergo a major transformation. With more of the heavy lifting being done by central banks around the globe, many investors are looking to the long term. Still, the current state of the global economy could have a major impact on the direction of the stock market in the years to come. Luckily, there are a lot of smart people in the industry working to ensure this doesn’t happen.
The German DAX is no exception, as it is one of the largest stock indices in the world. This, coupled with its large market capitalization and low cost, means that it is relatively cheap. At an expense ratio of 0.20%, the DAX ETF is a great way to get exposure to the best of German stocks without having to stray too far from home.