The DE 40 index is in a downtrend after reaching an all-time high amid the crisis in the German automotive industry. The DE 40 forecast for next week is negative.
Consumer inflation in Germany reached 1.9% year-over-year, fully aligning with analysts’ expectations. Price growth rates in the leading EU economy are slowing and standing below the ECB target of 2.0%.
Source: https://tradingeconomics.com/germany/inflation-cpi
Investors had priced in a gloomy outlook for European automakers, and the reality gradually appears to be even worse than expected. Germany as the leading EU automaker is suffering the most.
The five major automakers (BMW, Mercedes-Benz, Renault, Stellantis, and VW) had nearly a third of large European car factories underutilised last year, producing less than half the cars they can produce, as analysed by Bloomberg News based on the Just Auto data. The plant closures could fuel concerns that the region is in for a long-term downturn after falling behind its competitors. Therefore, the medium-term DE 40 index forecast is negative.
In terms of the DE 40 technical analysis, the index is in a downtrend. After reaching an all-time high, the quotes consistently break below each newly formed support level. The nearest target for the decline is currently at the 17,935.0 level. If the price falls further, the downtrend may last for several more weeks.
Key levels to watch in the DE 40 price forecast include:
Consumer inflation in Germany eased to 1.9% in August from 2.3% in July. This is a positive signal for the stock market as the ECB may lower the key rate more decisively. However, the real sector data is disappointing for investors – in particular, the crisis in the automotive industry may cause a recession both in the EU and Germany itself. For this reason, the medium-term DE 40 forecast is negative.
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