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DAX, DOW and FTSE Rise as Investors Rethink Path of Inflation and Rate Hikes

DAX, DOW and FTSE Rise as Investors Rethink Path of Inflation and Rate Hikes

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DAX 40:Steady on the Back of Falling German Business Confidence.

  • FTSE 100:Higher Despite UK Retail Sales Decline.
  • DOW JONES:Higher as Tech Stocks Lead the Way.

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DAX 40: Gains on the Back of Falling German Business Confidence

The Dax moved higher this morning adding to momentum from a late rally on Wall Street. Sentiment remains cautious as recent economic data point toward a potential downturn in growth. The uptick comes as headline German business confidence fell by more-than-expected to 92.3 in June, according to an Ifo institute survey. This comes on the back of falling Russian gas supplies which added weight to pre-existing pessimism in the manufacturing and service sectors of Europe’s largest economy.

The sectoral breakdown is positive with real estate and healthcare leading the way, with consumer cyclicals the only sector in red for the session. Notable movers included Merck KGaA, Puma and Siemens Healthineers AG with gains of 5.4%, 4.8% and 4.2% respectively.

DAX 40 Daily Chart - June 24, 2022

Source: IG

From a technical perspective, we have bounced since creating a new monthly low (12833) yesterday.

We have gained 150 points in the European session, yet price remains pressured with further upside presenting a possible short opportunity at the resistance area around 13274. If price remains below resistance we could drop lower toward the year-to-date lows (On the chart).

Key intraday levels that are worth watching

Support Areas

  • 12981
  • 12840
  • 12774

Resistance Areas

  • 13050
  • 13189
  • 13274
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FTSE 100: Higher Despite UK Retail Sales Decline

The FTSE gained around 1% in European trade this morning even as UK Prime Minister Boris Johnson suffered another blow to his leadership. Johnson lost two seats in his first electoral test after having narrowly survived a confidence vote among his backbench MPs earlier this month.

UK retail sales fell in May as squeezed households cut back on food spending amid the fastest price increases in over a decade.Separate figures from GfK showed UK consumer confidence slid to its lowest level since records began almost 50 years ago, as the cost-of-living crisis hits households, and a summer of strike action looms.

The FTSE posted gains across various sectors with industrials and healthcare leading the way, rising 2.4% and 2.3% respectively. Among the notable movers were Croda International, Carnival PLC and Experian with gains of 4.3%, 3.3% and 3.1% respectively.

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FTSE 100 Daily Charts - June 24, 2022

Source:IG

T

he FTSE once again retested our key psychological 7000 level yesterday before closing above. We have also created a double bottom on the 76.4% Fibonacci retracement level while price currently trades between the 61.8% and 50% Fibo levels. We are approaching a key resistance area at 7150 with a break above potentially leading to further upside. A rejection of this level opens up the possibility of further downside.

Key intraday levels that are worth watching:

Support Areas

  • 7100
  • 7000
  • 6900

Resistance Areas

  • 7150
  • 7330
  • 7454
FTSE 100 Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -12% 11% 0%
Weekly -20% 9% -6%
What does it mean for price action?
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DOW JONES: Higher as Tech Stocks Lead the Way

The technology sector spurred a climb in stocks Friday and bonds held a rally as investors evaluated economic threats and scaled back expectations for inflation and interest-rate hikes. Despite the price gains, investors continued to pull cash away from equity funds. Approximately $16.8 billion exited global stock funds in the week through June 22, with US equities seeing their first outflow in seven weeks at $17.4 billion, per EPFR (Emerging Portfolio Fund Research) data.

US Fed Chair Jerome Powell in testimony to lawmakers reiterated that his commitment to bringing down price increases is “unconditional.”Traders are starting to price out any Fed action on rates beyond the December meeting, scaling back the additional tightening they expect and flirting with the possibility of cuts in 2023.

On the calendar front we have new home sales and Michigan consumer sentiment due out at 14h00GMT.

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DOW JONES Daily Chart- June 24, 2022

Source: IG

From a technical perspective, yesterday’s bullish daily candle pushed the Dow closer to the resistance level at 31000.

This level will be key as any break above could open up a retest of the trendline while a rejection here could send prices lower to test the pre-covid highs at 29500.

Key intraday levels that are worth watching:

Support Areas

  • 30780
  • 30477
  • 30180

Resistance Areas

  • 31000
  • 31300
  • 32000
Wall Street Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 3% 1% 1%
Weekly 26% -15% -6%
What does it mean for price action?
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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.

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