European, Japanese Stocks Slip on Concerns About Interest Rates

The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of the average trading volume. Softer guidance from mega-cap tech stocks could send stock markets back to square one, one analyst said. Regional equity markets closed lower Monday with major bourses and almost all sectors in negative territory. Germany’s 10-year bond yield will be closely watched Tuesday after it hit its highest point since 2011 Monday, according to Reuters, as euro zone yields more broadly also increased. Investors who want international exposure without the risk of investing directly in foreign companies will gravitate to the DAX Stock Index.

Tech stocks saw the biggest decline, falling 2%, while autos dropped 1.2%. German retail sales dropped 1.2 percent in August compared with the previous month, official data revealed. Germany’s DAX lost 0.1% and the U.K.’s FTSE 100 was down 0.4% in early trading Monday.

• As you might expect, there are similar indices in other countries, inclusive to the major public companies that call those countries home.
• The British pound and euro both brushed six-month lows against the U.S. dollar.
• And while it’s a good benchmark for the broader economy, it only includes United States companies.
• For this reason, the DAX and its performance are also regarded as an indicator for the German share market as a whole.
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• Together, these 40 corporations represent about 80% of the aggregate market cap of the Frankfurt Stock Exchange, making it a prominent benchmark for the German stock market and European markets as a whole.

The DAX was founded in 1988 as a way to benchmark the performance of the German stock market. It originally included 30 of the largest German companies and quickly became a barometer not only for Germany’s water stocks economic health, but for European markets as a whole. As of September 3, 2021, the index expanded from 30 to 40 constituents. Companies italicized in the list below were added as part of the expansion.

The prospect of a lower peak interest rate than markets had previously expected has weighed on the currency, as concerns over the U.K. The Bank of England held its key rate steady at 5.25% in September after 14 straight hikes. Its losses for September currently stand at 3.65%, according to LSEG data — putting it on course for the worst month for a year, when the “mini budget” announced by former U.K. Prime Minister Liz Truss caused havoc in markets and the pound fell to a record low of $1.0327. The U.K.’s FTSE 100 was flat as a range of London-listed firms — including electronics distributor RS Group, bank Barclays and grocery delivery firm Ocado — topped European stock gains. Investors are looking ahead to inflation data for the region due to be released Friday which could influence the European Central Bank’s next move.

MarketWatch

Stocks in Europe and Japan lost ground on Monday as the market absorbed the message from central banks that interest rates will stay higher for longer, even as the economy shows signs of slowing. Most stock indexes impose various requirements and hurdles that need to be cleared to be eligible to be listed on the index. For example, the S&P 500 Index – which is one of the most reputable U.S. indexes, requires companies to post four straight quarters of profitability before being considered eligible to be listed in the index. As a blue-chip stock market index, the DAX is very similar to the Dow Jones Industrial Average (DJIA), which also tracks large, publicly owned companies.

The DAX Index tracks 30 large and actively-traded German companies within the Frankfurt Exchange, which is the largest financial exchange in Germany. The DAX is the most prominent stock index for Germany, and it is considered to be a proxy for the performance of the German economy and market conditions. The DAX—also known as the Deutscher Aktien Index or the GER40—is a stock index that represents 40 of the largest and most liquid German companies that trade on the Frankfurt Exchange.

For example, shares must be listed in the Prime Standard of the Deutsche Börse. In this exchange segment, companies must meet specific international transparency requirements. For example, the companies must present regular quarterly reports and annual financial statements as well as hold an annual analyst conference. In a different twist from most indices, the DAX is updated with futures prices for the next day, even after the main stock exchange has closed.

Changes are made on regular review dates, but index members can be removed if they no longer rank in the top 45 largest companies, or added if they break the top 25. Of course, investors can always mimic the index by investing in each company that comprises it. While this allows you to pick and choose which companies or sectors you add to your portfolio, you lose the peace of mind that comes with a broad-market investment. Often, it’s best to own shares in an ETF that’s pegged to index performance. The DAX, also called the DAX40 or the Deutscher Aktien Index, is a stock market index consisting of the 40 largest German companies that trade on the Frankfurt Stock Exchange.

Signs that the Bank of England and European Central Bank will hold rates steady while the Federal Reserve may have another hike in store also weighed on European currencies. The British pound and euro both brushed six-month lows against the U.S. dollar. The benchmark DAX jumped 113 points, or 0.7 percent, to 15,436 after climbing 0.7 percent in the previous session.

Companies that are listed on the DAX are multinational companies that operate in multiple countries beyond just Germany. However, they play a large role in terms of making up a significant portion of Germany’s gross domestic product (GDP). Get this delivered to your inbox, and more info about our products and services.

Q3 2023 In Review and Market Outlook

European equity markets declined Tuesday, with the regional Stoxx 600 index down by 0.6%. U.S. stocks declined in morning trade as September’s selling pressures took hold of Wall Street following gains in the previous session. Data from purchasing managers’ indexes on Monday showed manufacturing in Germany, France, and the U.K. chaikin money flow indicator Nevertheless, the European Central Bank raised interest rates a few weeks ago, while the Bank of England said it may need to increase borrowing costs again later this year. Snap’s CEO warned of a challenging macroeconomic environment, while the euro rose after ECB chief Lagarde said interest rates are at a turning point.

Other Major Stock Exchanges

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany 40-bearish contrarian trading bias. The DAX Stock Index is a very concentrated index holding only blue-chip companies that are very large and successful. It is very similar to the Dow Jones Industrial Average (DJIA), which is a price-weighted index that includes 30 very large U.S. companies. The DAX Stock Index is calculated based on the free-float adjusted market-cap weighted index methodology.

Key data points

Together, these 40 corporations represent about 80% of the aggregate market cap of the Frankfurt Stock Exchange, making it a prominent benchmark for the German stock market and European markets as a whole. The DAX (Deutscher Aktien Index) is a stock index based out of Germany that represents the 30 biggest German how to buy safe moon companies that trade on the Frankfurt Exchange. The index value is calculated every second based on Xetra technology. The DAX was created in 1988 with a starting index level of 1,163 points. DAX member companies represent roughly 80% of the aggregate market capitalization that trades on the Frankfurt Exchange.

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