The premier German stock index, comprising a weighted average of the 30 largest companies on the Frankfurt Stock Exchange.
The German stock index DAX 30 (GER30) was introduced under "DAX" on July 1st in 1988, by the Frankfurt Stock Exchange. It consists of the 30 largest companies listed on the Frankfurt Stock Exchange based on market capitalization and liquidity. The trading hours for the Frankfurt Stock Exchange take place from 9:00 a.m. to 5:30 p.m. CET. The DAX30 is usually reported as a performance index, which means that the companies' dividends are reinvested. In a price index, the corporate distributions remain disregarded (this can be seen, e.g., in EUROSTOXX50). If a company wants to be included in the DAX, it must be listed in the Prime Standard; it must be traded continuously in Xetra and have at least a free float of 10 %.
Additionally, the company must have a registered office in Germany, or the main focus of its traded volume in shares is in Frankfurt, and the company has a seat in the EU. Based on market capitalization, the five biggest German companies listed in the DAX 30 are Bayer (BAYN), Daimler (DAI), Siemens (SIE), Allianz (ALV), and BASF (BAS). The development in the DAX is often seen as an indicator of the development of the German economy. As a result, the DAX can be seen as a proxy for European economic health since the German economy accounts for almost one-third of the total value of the Eurozone economy. The DAX 30s counterparts in Europe are the CAC 40 in France and the FTSE 100 in Britain.
Germany 30 – Q1 2021 Outlook
The Germany 30 or DAX 30 Index has gained more than 2% year to date, rising more than 7% in the year's final quarter. German stocks had struggled during the second quarter due to lockdowns amid the coronavirus outbreak. While stocks recovered in the third quarter, Frankfurt's DAX 30 came under pressure again with a seeming stalemate in Brexit talks and a delay in the US stimulus package.
With a Brexit trade deal now signed and the approval of the new covid-19 relief package, there could be an upside to the DAX 30 index in the first quarter of 2021. Also, the rollout of the BioNTech-Pfizer coronavirus vaccine in Germany could further lift investor sentiment.
Economic Data to Watch Out for in Q1 2021
January 5, 2021/ February 1, 2021/ March 2, 2021: German Retail Sales
In October, Germany reported the most robust growth in retail sales since April 2018, as the country recovered from the covid-19 crisis. Retail sales grew 2.6% in October, following a 1.9% decline in September. With another strain of the virus being detected in the UK and various regions reimplementing lockdowns, Germany's retail sales are expected to decline by 2.2% in November.
January 8, 2021/ February 5, 2021/ March 5, 2021: US Non-Farm Payroll Data
Global markets generally become volatile on the release of US jobs data. With covid-19 cases rising sharply, a significant decline in jobs growth is expected. The US economy created 245,000 jobs in October, and just 190,000 jobs are likely to be added in December.
January 6, 19, 28, 2021/ February 10, 2021/ March 1, 12, 30, 2020: Germany Inflation Rate Preliminary & Final
In November, consumer prices in Germany declined the most since January 2015, falling 0.3% year-over-year. The country recorded its fourth month of deflation since the start of the year, following the temporary reduction in VAT from July 1 to support the economy from the covid-19 crisis. For December, consumer prices are likely to decline by 0.3%.
January 19, 2021/February 16, 2021/ March 16, 2021: German ZEW Economic Sentiment Index
The ZEW Indicator of Economic Sentiment improved by 16 points to a reading of 55 in December, with optimism around covid-19 vaccines providing the boost. For January, the index is expected to strengthen further to a reading of 60.
January 21, 2021/ March 11, 2021: ECB Interest Rate Decision
The European Central Bank maintained its primary refinancing rate at 0%, while the deposit rate was held at a record low -0.5%. However, during its December policy meeting, the ECB announced the expansion of its Pandemic Emergency Purchase Programme by another €500 billion, extending the same to at least the end of March 2022 to support the economy. The central bank is expected to keep rates unchanged in 2021.
January 14, 29, 2021/ February 24, 2021: Germany GDP Growth For Full-Year & Q4 (Estimate and Final)
Germany's GDP contracted by 4% year-over-year in the third quarter, following a record contraction of 11.3% in the prior three-month period. The country's economy will likely contract 5.8% in 2020, with a 4.6% year-over-year decline expected for the fourth quarter.
Q1 2021 Predictions: Political Events That Could Impact the Germany 30
Germany will begin polls in autumn 2021 to elect a new federal parliament and government, bringing an end to Chancellor Angela Merkel's tenure of 16 years.
Q1 2021 Predictions: Other Events That Could Impact the Germany 30
Any developments in the covid-19 vaccine rollout will influence market movements.