DAX, CAC and SMI Forecasts – European Indices Attempting to Continue Higher

DAX Technical Analysis

The DAX in Germany has shown quite a bit of resilience over the last couple of days after opening up the week gapping much lower, we have seen a complete turnaround, and we are hanging around the 200-day EMA. Falling energy prices could provide a bit of a tailwind for Germany’s heavy manufacturing base, such as BASF, and additionally the automotive sector, BMW and Mercedes-Benz, for example, have stabilized as export concerns regarding US tariffs have been partially priced in.

Profitability is being maintained through aggressive cost-cutting rather than revenue growth, maintaining the ability for this sensitive index to see new, renewed spikes on dropping input costs. All things being equal, it does look like the line in the sand is 24,250. If we can get above there, the DAX should take off.

CAC 40 Technical Analysis

The CAC 40 in Paris has been resilient as well, with it testing the 8,300-euro level it does look like it’s trying to get to the 8,400-euro level. Heavyweight luxury sector names such as LVMH and L’Oreal had been a drag on performance due to sluggish global demand and earnings misses. Conversely, the defense sector, such as Airbus, is providing a structural floor to the index as European nations increase military spending. It’s currently a little bit of a laggard compared to the DAX but luxury earnings picking up could be the catalyst coming.

SMI 20 Technical Analysis

And finally, in Switzerland, the Swiss Market Index is trading right around the 13,200 level, with the current move being driven by the financial sector, which is a little bit different than usual. Typically, the SMI is driven by healthcare, such as Roche or Novartis, but right now, the current move is a big factor in the UBS move.

Now, while the SMI underperforms during aggressive risk rallies, its gain over the last year has been more of a steady as she goes type of approach. With this, I think you do even in times of massive selling see a little bit more resilience in specific names in Switzerland, such as consumer staples like Nestle. I think that will continue to be the case. At this point, the Swiss market has also enjoyed a little bit of safe-haven status. All things being equal, if we can break above the 13,300 level, then it opens up a move to 13,600.

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