DAX 40 Hit by Nasdaq 100 Slump, German IFO Warns of Growing Pessimism

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NASDAQ 100 AND DAX 40 PRICES AND CHARTS

• Nasdaq 100 falls 2.5% overnight, opens lower in Europe.
• DAX 40 in the red with the latest IFO assessment adding to economic pessimism.

The DAX 40 is trading the best part of 1% lower in early European trade, hampered by heavy losses in the NASDAQ 100. The top 10 constituents of the NASDAQ 100, by market weighting, all registered hefty losses last night, sending the index down by nearly 2.5%. The tech index is currently down another 0.75% in Europe.

While the Nasdaq chart remains positive for now on a longer time frame, with a multi-month set of higher highs and higher lows in place, a break below the 15,500 area of prior support may see short-term losses deepen as we head into the end of the year. Traders should also be aware that today is a quarterly ‘quadruple witching’ Friday when stock index futures, stock index options, stock options, and single stock futures expire simultaneously. This is likely to lead to volatile swings today.

NASDAQ 100 DAILY PRICE CHART – DECEMBER 17, 2021

The latest German IFO release (December) warns that ‘the deteriorating pandemic situation is hitting consumer-related service providers and retailers hard’. The IFO business climate index fell to 94.7 from 96.6 in November as ‘companies assess their current business situation as less positive’ while pessimism regarding the first half of 2022 also increased. The IFO Institute ended, ‘the German economy isn’t getting any presents this year’.

Both the Nasdaq sell-off and the pessimistic IFO release are weighing on the DAX 40 with the German bourse down 0.80% this morning. The Dax is being led lower by the 20-day simple moving average and now trades below both the 50- and 200-day smas, adding to the negative outlook.

DAX 40 DAILY PRICE CHART – DECEMBER 17, 2021

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By Nick Cawley, Strategist, 17th December 2021. DailyFX