Article by IG Senior Market Analyst Axel Rudolph
FTSE 100, DAX 40, S&P 500 Analysis and Charts
FTSE 100 sinks on rate hike fears
The FTSE 100 is fast approaching its March low at 7,204, tracking losses in Asia and on Wall Street as strong US ADP jobs data reinforced expectations that the Federal Reserve (Fed) will hike rates further. Minor resistance can be spotted at the 7,296 December low and also at the 7,331 24 March low.
FTSE 100 Daily Price Chart
DAX 40 falls through key support
The DAX 40 has now fallen through its April-to-July major support zone on the back of strong US jobs data and downwardly revised German manufacturing PMI which points to a weak economy. The fact that a daily chart close below the 16,625 to 15,710 April-to-July support zone has occurred is technically bearish as it indicates that a significant top has now been formed.
Below the early April low at 14,481 lie the mid-January and late March highs at 15,305 to 15,272 ahead of the 200-day simple moving average (SMA) at 14,948 which now represents a medium-term downside target. Resistance at 15,625 to 15,710 is expected to thwart any attempt of a bullish reversal taking place today.
DAX 40 Daily Price Chart
S&P 500 slips on strong jobs data ahead of Non-Farm Payrolls
The S&P 500 dropped to a one-week low at 4,384 as US ADP Non-Farm jobs data came in much stronger-than-expected at 497k versus an expected 226k in July, forcing the Fed to hike rates further and leading to a surge in global yields while equities came under pressure. The (redrawn) May-to-July support line at 4,393 is likely to be revisited on Friday around the Non-Farm Payrolls data release, below which lies Thursday’s low at 4,389 and the late June low at 4,328. A drop-through and daily chart close below this level would point to a significant top being formed.
Resistance can be found between Wednesday’s low and Thursday’s high at 4,430 to 4,434.
S&P 500 Daily Price Chart
