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What Causes the DAX to Move?
Date Modified: 26/07/2023
The DAX (Germany 40) consists of the 40 largest companies on the Frankfurt Stock Exchange.
The value of the DAX is calculated by an electronic trading system called Xetra, which weighs each company’s market capitalisation combined with their average trading volumes. This weighted figure serves as a snapshot that traders can use to track the index’s performance.
What are the top DAX companies?
DAX companies are chosen based on their Free Float-Adjusted Market Capitalisation, representing the total value of their openly traded shares. The rankings are adjusted every quarter.
The top 10 largest companies included on the DAX are:*
- SAP (SAP.DE) - A software company specialising in enterprise applications.
- Linde (LIN.DE) - An industrial gases and engineering company.
- Siemens (SIE.DE) - An international conglomerate and manufacturing company.
- Volkswagen (VOW.DE ) - A German multinational automotive corporation.
- Airbus (AIR.DE) - A multinational aerospace technology company.
- Merck (MRK. DE) - A health science and technology company.
- Deutsche Telekom (DTE.DE) - A telecommunication company.
- Allianz (ALV.DE) - A multinational financial services company.
- Daimler (DAI.DE) - A German multinational automotive corporation.
- Deutsche Post (DPW.DE) - A multinational package delivery company.
Illustrative prices.
What moves the DAX’s price?
The change in market value of each company included on the DAX index is weighted. This in turn determines what the index is worth on a daily basis.
For example, while SAP may have a larger market capitalisation than Linde, its impact on the index is capped at no more than 10% of the index totals. This way, the other 39 companies can still affect the listing’s valuation significantly, and ensures that a single company can have no more of an influence than what is warranted by the DAX’s overall values.
Once the market closes each day, the listed companies’ prices are calculated and placed into a determined formula, showing the top 40 companies’ overall daily movement. While the share price of some of the companies included on the index may have soared during that day’s trading sessions, others may have fallen. Traders can see if the index as a whole rose or fell based on the collective figure calculated at the end of the day.
This helps traders better evaluate the index’s movements and volatility over a period of days, weeks, months, or even years.
How do companies get onto the DAX index?
The Frankfurt Stock Exchange board, which calculates the DAX, meets to review company standings and market valuations every quarter. A company can be removed if it falls out of the top 45 largest companies, or it can be added once it breaks into the top 25.
The DAX’s movements are an overall snapshot of the day’s trading activity amongst all 40 companies. Its weighted valuation can rise even if the shares of some companies included on the DAX go down in price. Likewise, when some of the included companies see a rise in share prices, the index as a whole can still fall.
*Largest companies as of October 2021.
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Germany 40 FAQ
Germany 40 index futures CFD, which is based on the DAX index futures, tracks the 40 largest companies with the highest trading volume on the Frankfurt Stock Exchange. It is considered a highly popular financial instrument among day traders.
Germany 40 is a capitalisation-weighted index, meaning its value is determined by summing up the components of the index based on the market capitalisation of their freely tradable shares, and then dividing that figure by the total number of companies. As a result, large-size companies in the index have a higher impact on the price then small-size companies.
The price of the Germany 40 futures contract can be influenced by numerous factors relating to Germany’s economic stability - ranging from its GDP growth rate and government revenues, to changes in interest, inflation and unemployment rates. Furthermore, macroeconomic events and changes in trade agreements, at both regional and global levels, tend to move the Germany 40 index, which represents one of Europe’s biggest and most influential economies.
You can find live updates on the instrument’s Details screen regarding economic events and reports that may affect Germany 40.
Europe’s leading stock market indices are open for trading from Monday to Friday. Below are their usual opening and closing times in UTC:
- Germany 40, Europe 50, France 40, Italy 40, Spain 35, Swiss 20 – Open at 07:00; Close at 21:001.
- UK 100 – Opens at 01:00; Closes at 21:001.
1 These hours may change from time to time depending on the underlying stock exchanges.
Here are 7 steps to start trading Germany 40 CFDs with Plus500:
- If you don’t already have a Plus500 account, open a Trading Account Here.
- Complete your account registration, documents verification and deposit funds.
- Search for Germany 40 under the ‘Indices’ category or in the search bar.
* You can add Germany 40 to your Watchlists, by clicking the Watchlists star on the instrument’s info screen. - Check for live and historic prices of Germany 40 with Plus500's advanced charting tools.
- Check the Economic Calendar for events that may cause price movements in Germany 40.
- Consider placing stop orders: you can define in advance the profit you would be happy with and/or the level at which you would like to close out the position should the trend turn against you.
- Open a trade on Germany 40 according to the direction you think it will move: ‘Buy’ if you believe it will rise in the future; ‘Sell’ if you believe it will fall.