Fed, ECB Surprise Drives Sentiment. Can DJI, FTSE & DAX Recover?
- DAX 40: DAX higher as ECB call unscheduled meeting
- FTSE 100: Equities steady as British Pound suffers
- DOW JONES: US equities higher as FED meeting looms
DAX 40: DAX higher as ECB call unscheduled meeting
European Equities are trading higher this morning as the regions bond’s advanced after the European Central Bank (ECB) announced an unscheduled meeting Wednesday to tackle volatile market conditions. Investors are looking to the ECB’s unscheduled meeting to give details on how it plans to keep bond yields of the region’s most vulnerable members in check.
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This move follows a sharp widening in the spreads between the yields of Germany and more indebted southern nations, particularly Italy. Fears of stagflation driving stocks into a bear market while parts of the US yield curve remain inverted, signaling concerns that restrictive monetary policy will lead to an economic downturn.
Like most central banks the ECB is between a rock and a hard place, with high inflation, fragile economy and ever-rising energy costs any intervention to reduce risk will be welcomed.
Among the notable movers on the DAX were Continental Ag and Allianz who posted gains of 4% and 3.17% respectively.
DAX 40 Daily Chart- June 15,2022
Technically the DAX has finally tapped the support area around the 13270 area, posting a low around 13220 before the D candle closed above support. We have seen a bullish morning on DAX as it rallied approximately 205 points during the European session to post a high of 13511.
Volatility could peak during the ECB meeting as well as the Federal Reserve Meeting later today. Intraday support may be found at 13389, 13208 and 13113 while resistance may be offered at 13665 and 13760 areas.
FTSE 100: UK Equities Hold Despite British Pound Pull-back
The FTSE 100 follows European stocks in a positive European trading session, posting gains of approximately 70 points. With little on the calendar this morning, yesterday’s unemployment numbers coupled with Boris Johnson’s attempt at overriding the Northern Ireland protocol remain the biggest challenges heading into the Bank of England (BOE) rate decision tomorrow.
Attention now turns to the Federal Reserve meeting tonight as the markets brace for the largest rate hikes by the FED since 1994.
Among the notable movers of the FTSE this morning we have Whitbread PLC and London Stock Exchange Group that posted gains of 5.6% and 4.8% respectively.
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FTSE 100 Daily Charts- June 15,2022
Price Action on the FTSE has seen a bounce as it tapped into our support area of 7120. A dip back below the 7120 area could open-up the possibility of a retest of the psychological level of 7000. Selling pressure remains high as the Bank of England (BOE) meeting approaches.
Intraday support may be found at 7124 and 7061 while resistance may be found at 7261 and 7397 areas respectively.
DOW JONES: US equities rise as Dollar retreats from two-year high
US equities were up in premarket trade as policymakers on both sides of the Atlantic grapple with soaring inflation, slowing economic growth and volatile markets.
It is expected to be a blockbuster Wednesday for the markets as uncertainty over the potential rate hike from the FED weighs heavy on sentiment. At this stage increments of 50, 75 and 100 basis points have all been chewed over by commentators. How much of this hike has been priced in remains to be seen?
We still have US retail sales to come before the FED meeting which could add another layer of consideration for the FED.
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DOW JONES Daily Chart- June 15,2022
Technically price has finally had a candle close below the support level around 30500. As we can see we are slightly up on the day in premarket with gains of approximately 200 points. Downside pressure remains as we await the Federal Reserve meeting.
Intraday resistance may be found at 30700 and 30980 while support rests at the 30220 and the psychological 30000 area.
Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.