Asset Watch
Thursday, July 6, 2023
More importantly, since the ZEW ESI is often a good indicator of the DAX index’s future direction, the recent divergence remains problematic. The black line tracks the DAX index’s daily movement, while the orange line tracks the ZEW’s monthly ESI. As you can see, the former has largely followed the latter over long time horizons.
While the DAX index attempts to reclaim its record high, the ZEW ESI is back below zero. As a result, the surge that helped spur the DAX index’s October 2022 rally is no longer supporting the bulls.
So, will the DAX index catch down to the ZEW ESI, or will economic sentiment turn sunny again in Germany?