Outlook on FTSE 100, DAX 40 and S&P 500 amid S&P Global U.S. bank downgrades, U.S. long dated yields surging higher and Zoom beating estimates.
FTSE 100 continues to hover above support
The FTSE 100 continues to precariously hover above key support which sits between its March and July lows at 7,228 to 7,204 as the UK’s public sector net borrowing came in slightly weaker-than-expected at 3.5 bn versus a forecast 3.8 bn.
On Monday UK homebuilders fell following a downbeat update from Crest Nicholson Holdings but so far the UK blue-chip index continues to stabilise. Further low volatility trading above its 7,228 to 7,204 major support zone is expected to be seen on Tuesday, ahead of Thursday’s U.S. Jackson Hole symposium. Minor resistance above Monday’s 7,317 high sits at the 24 March low at 7,331 and more significant resistance between the May and June lows at 7,401 to 7,433.
DAX 40 probes accelerated downtrend line
The DAX 40’s slide has taken it to marginally above its 15,455 July low last week before the index tried to recover despite U.S. 10-year yields rising to levels last seen in November 2007 and S&P Global downgrading several U.S. banks. In case of a break through the July-to-August accelerated downtrend line at 15,705 taking place, minor resistance around the 4 August low at 15,780 could be reached next. Further up meanders the 55-day simple moving average (SMA) at 16,001.
While the index remains below the next higher 10 August high at 16,062, overall downside pressure remains in play, though. Strong support remains to be seen between the July and current August lows and the 200-day simple moving average (SMA) at 15,469 to 15,420.
S&P 500 recovers from near two-month low
The S&P 500 is expected to recover further from last week’s 4,337 low, made marginally above its 4,328 late June low, and is seen heading back up towards the 55-day simple moving average (SMA) at 4,447 ahead of Thursday’s Jackson Hole symposium.
Speeches by Federal Open Market Committee (FOMC) members Goolsbee and Bowman as well as U.S. existing home sales may still throw a spanner in the works beforehand. Having said that, rallies in Tesla, Zoom and Nvidia stocks, the former technology company having beat its Q2 earnings and revenue estimates and the latter announcing its Q2 earnings on Wednesday, currently underpin more positive market sentiment. Minor support can now be spotted at Friday’s 4,382 high and major support at 4,337 to 4,328.