Germany's DAX 40 Stock Index Flirts with Critical 20,000-Point Milestone

The DAX 40, Germany's leading stock index, finds itself flirting with the critical 20,000-point milestone as investors navigate the first trading week of 2025.

Germany’s DAX 40 index is expected to open lower on Friday, as the market digests the key psychological level of 20,000 points, which the index managed to breach in the previous session.

The DAX closed at a record high on Thursday, finally crossing the 20,000-point threshold for the first time this year. The index rose 0.2% to close at 19,996.16 points, as traders returned from the Christmas break.

Now, as the first trading week of 2025 comes to an end, the market is showing signs of fatigue.

Early indications show that the DAX is set to open at 19,982 points, according to IG broker. This marks a slight decrease of 0.21%.

After crossing the 20,000-point level on Thursday in a relatively muted session, the index is now trading flat. With many traders still out on vacation, the market is expected to remain subdued as we head into the weekend.

However, the performance of the DAX at this pivotal level will be crucial in setting the tone for its direction in early 2025.

Several macroeconomic factors are also influencing sentiment, including:

Rising inflation in Germany, which reached 8.6% in December on an annualized basis.

The ongoing conflict in Ukraine and its impact on energy prices and supply chains.

Central bank policies and expectations for further interest rate hikes to curb inflation.

From a technical standpoint, the 20,000-point level is a key psychological and technical threshold for the DAX index. A sustained close above this level could instill confidence among bullish traders, while a slip below it may signal caution and invite selling pressure.

On the downside, support is seen around 19,750 points, with significant buying interest likely present near the 19,657 level, which aligns with the 50-day EMA (Exponential Moving Average).

On the upside, a clear break above Thursday's high could set the stage for a rally towards the all-time high of 20,523 points.

Despite the DAX's strong start to 2025, the market is still digesting the impact of global trade dynamics and central bank policies. With light trading volumes and the holiday season still in effect, investors are likely to be waiting for clearer signals before making bold directional moves.

Whether the DAX can firmly establish itself above the 20,000-point barrier will depend on upcoming economic data and geopolitical developments in the weeks ahead.