Whether you speculate on the stock market through your online bank or using an online trading platform using investment tools, at some point you will probably consider trading in major European stock market indices such as the DAX 30.
Germany's contribution to the EU budget can increase by 42%, i.e. by €13 billion. Member States will discuss the budget for 2021-2027 on Friday.
To guide your choice up or down, you will also need to keep an eye on the economic calendar, which very often publishes data that has a strong influence on the DAX 30. This is the case for all German economic statistics such as GDP, bond yields, industry and production figures that provide traders with an overall direction to follow.
But European data must also be taken into account, which may in some cases favour or harm certain economic sectors. For example, a decrease in the interest rate of the Euro will undoubtedly result in a better competitiveness of European companies and therefore an increase in the price of the DAX 30.
The DAX 30 is the major German stock exchange index, equivalent to the French CAC 40. This index is that of the Frankfurt Stock Exchange. But one of its major particularities concerns the volume of transactions that it generates which makes it the highest traded European index worldwide.
As indicated by its name, the DAX 30 uses the quotations of the best quoted 30 large German businesses, with the aim of providing a realistic overall view of the country’s economic health with all sectors of activity represented. The companies quoted are essentially selected according to their representation of the country’s economic health. Of course, this list changes regularly according to movements in the prices, profits and activities.
If we study its composition in detail we can logically find several large automobile sector groups, as well as several banking groups.
If you wish to invest in the DAX 30 it is best to trade on the rate of one of the 30 different company shares that are represented by this index. Here then is a list of these component companies classified according to their stock market capital:
Of course, this classification is liable to change and takes into account the stock market capital of German companies in October 2018.
Let us now examine the calculation method for the DAX 30 index. Here the weight of each company that comprises this index depends on its total stock market capital as well as its floating stock market capital; that is the number of company shares available on the stock market.
However, to ensure that the reliability of this index is not biased in any way and remains representative of the German economy, it is impossible for a company to have an index weight superior to 10% of the total value of the DAX 30.
On the other hand it is essential that the companies that are integrated into the DAX 30 represent at least 75% of the total capital traded on the German stock exchange.
However we can distinguish two categories of the DAX with different calculation methods. The DAX PR index is calculated in the same way as the CAC 40 and the dividends, or income from the shareholders is not taken into account in the total calculation. The DAX TR however does integrate the dividends paid to the shareholders of its different companies. Its name comes from an abbreviation of DAX Net Total Return. Its French equivalent is the CAC 40 NR which also takes dividends into account. In this case we consider that the dividends paid are immediately reinvested.
In any case, the DAX TR is considered as a reference for the state of the German markets. Let us now look at the formula used to calculate the rate. This is fairly simple and consists of dividing the total stock market capital of the related companies by the preceding value and dividing the result obtained by the preceding period.
Another major difference relating to the DAX 30 compared to other major worldwide indices is that this is updated daily with the futures rates for the following day, after the close of that day’s business.
Since 2006 it is the Xetra calculation platform that is responsible for the quotes of the DAX 30 index with a calculation completed every 15 seconds. This computerised and automatic financial products transaction system is situated in Frankfurt in Germany.
The quote for this index starts each day at 9 a.m. and ends at 5.30 p.m. This index is quoted in a continuous manner throughout this time, as is the case with the French CAC 40 index.
Using the information that we have revealed to you, you now know how the DAX 30 German stock market index operates and how to trade on it and on its shares.
It is possible to trade on the DAX 30 stock exchange index during the opening hours of the German stock exchange. Until 8:50 am, this is the pre-trading period which is followed by the auction phase where orders are stored and exchanged in one go between 8:50 am and 9:00 am. From 9:00 am to 1:00 pm, this is the continuous trading phase with an immediate match between supply and demand. Between 1:00 pm and 1:02 pm, an auction phase stores the orders that are exchanged in one go. Between 13:02 and 17:30, a new phase of continuous trading is followed between 17:30 and 17:35 by a new auction phase. Post-trading takes place after 17:35.
To calculate the price of the DAX 30 stock market index, a calculation is made that reinvests dividends and other bonuses paid to shareholders, which is not the case for other indices such as the CAC 40 for example. The formula used to perform this calculation is the Laspeyeres formula. You can find more details on this subject online.
There are different ways to invest in the DAX 30 stock market index. You can choose to invest through futures and options contracts listed on the EUREX, invest through CFDs or contracts for difference, invest through Trackers which are offered by issuers or by using stock exchange products such as Warrants and Turbos.