Jump to content

European indices update: DAX and FTSE fight to maintain altitude

Recommended Posts

The European Central Bank and Bank of England are bracing for probable interest rate hikes following persisting inflation woes. While DAX retains potential for continued growth, FTSE confronts a potentially deeper decline.


original-size.webpSource: Bloomberg

 Tony Sycamore | Market Analyst, Australia | Publication date: Tuesday 04 July 2023 

Lagarde's hawkish tone echoes in ECB's path ahead

Last week, hawkish comments from ECB President Lagarde at the ECB's Sintra conference solidified expectations of an rate hike in July.

Lagarde's comments came ahead of the release of EA inflation data, which would have provided little comfort to ECB hawks.

While EA headline inflation eased to 5.5% YoY in June from 6.1%, it remains well above the ECB's target of 2%. Additionally, core inflation increased in June to 5.4% YoY from 5.3% prior. Neither reading gives much reason to push back on market pricing of another two 25bp rate hikes, which would take the ECB's official deposit rate to 4% by year-end.

UK markets reel from inflation shock

In the UK, markets are still dealing with the fallout of May's recent horrific inflation data print. The rates market is almost fully priced for another 125 bp of rate hikes from the BoE over the next eight months, taking the BoE's official cash rate to 6.25%.

Just one month ago, the market was looking for the BoE's terminal rate to land at 5.50%. The savage repricing higher in the rates market has revived fears of a recession and weighed on the FTSE in the process.

DAX technical analysis

Last month the DAX printed a fresh all-time high at 16572 before bearish divergence via the RSI indicator undermined the move and kept the DAX trading within the confines of its upward-sloping trend channel.

Providing the DAX remains above support from the bottom of the trend channel 15950ish and last week's 15,833 low allow for the DAX to continue to edge higher.

Aware that should the DAX see a sustained break of 15,950ish and then falls below the recent swing low at 15,833 low, a deeper decline is expected towards support at 15,300/300 before the 200-day moving average (MA) of 14,900.

DAX daily chart


original-size.webpSource: TradingView

FTSE technical analysis

The dour macro backdrop in the UK outlined above has weighed more heavily on the FTSE in recent weeks as it builds acceptance under the 200-day MA, currently at 7543.

Presuming the FTSE remains below the 200-day MA and then breaks below uptrend support at 7400, a deeper decline is expected towards support at 7200, coming from year-to-date lows.

Until then, however, further sideways-range trading within the triangle mapped below is possible.

FTSE daily chart


original-size.webpSource: TradingView


  • Source: TradingView. The figures stated are as of July 4th, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Thanks for the input,  The issue is being resolved.  IG took a position Twice.  Remedy is imminent.
    • Prepare to witness a paradigm shift in Bitcoin Layer 2 solutions with Merlin Chain, an innovative platform that integrates the ZK-rollup network, decentralized oracle, and on-chain BTC anti-fraud module. With seamless compatibility with the Ethereum Virtual Machine (EVM), Merlin Chain sets new standards for security, transparency, and interoperability in the blockchain ecosystem.  Creating a Safe and Transparent Environment: At the core of Merlin Chain's mission lies its commitment to creating a safe and transparent environment for all investors. By integrating anti-fraud security solutions directly into the blockchain, Merlin Chain mitigates the risk of fraudulent activities and ensures the integrity of transactions. With Merlin Chain, users can trust that their assets are protected and transactions are executed with the highest level of security and transparency. Excitement mounts as Merlin Chain (MERL) prepares for listing on Bitget Exchange on April 19th, 2024, at 10:00 (UTC). This milestone event not only amplifies Merlin Chain's visibility but also provides users with a trusted platform to trade and engage with the MERL token. As Merlin Chain continues to push the boundaries of Bitcoin Layer 2 solutions, its listing on Bitget Exchange marks a significant step forward in its journey towards broader recognition and adoption.
    • Rarible is a revolutionary platform for artists and creators in the digital world. It functions as both: Software: Artists can use it to create and sell unique crypto assets representing ownership of their digital work, like illustrations or animations. These are known as Non-Fungible Tokens (NFTs). Marketplace: Buyers can discover and purchase these NFTs directly from creators, eliminating the need for intermediaries.   Built for the Community: It is a community-owned marketplace, powered by its native token, RARI. Owning RARI tokens gives holders a voice in shaping the platform’s future.   Exciting News! Rarible recently listed its token (RARI) on the Bitget exchange, along with a “candybomb” event to reward holders. This is a great opportunity for artists and crypto enthusiasts alike to explore the world of NFTs on Rarible.
  • Create New...