DAX Index, FTSE 100, STOXX 600: Euro Zone PMI Boosts European Markets; Tech Stocks Surge

Key Points

• European markets rise on positive euro zone PMI data.
• Tech, energy sectors lead with strong earnings reports.
• China’s economic policy positively impacts European markets.

European Markets Rally on PMI Data and Earnings

European markets witnessed a significant upswing on Wednesday, buoyed by positive preliminary PMI data from the euro zone and robust earnings reports from key technology and energy companies.

At 11:37 GMT, the broad-based Stoxx 600 is trading 475.83, up 4.30 or +0.91%. Germany’s Dax Index is at 16813.83, up 186.74 or +1.12% and the UK’s FTSE 100 is trading 7515.10, up 29.37 or +0.39%.

Technology and Energy Stocks Lead Gains

Technology stocks experienced a notable surge, led by German tech giant Siemens Energy, which soared 11% after surpassing first-quarter forecasts. Similarly, German software company SAP witnessed a 7.7% rise following its financial results announcement and a strategic shift towards AI. These strong performances, alongside improved PMI data, have been instrumental in driving the Stoxx 600 and Germany’s DAX Index upwards.

Improved Business Activity in Euro Zone

The composite services and manufacturing PMI data indicated an uptick in business activity in the euro zone, providing a positive outlook ahead of the European Central Bank’s upcoming meeting. This improvement was mirrored in the UK, where PMI figures reached a seven-month high, contributing to the rise in the FTSE 100.

Strong Earnings and Chinese Stimulus Boost Sentiment

Earnings reports from European companies like ASML Holding and SAP, which beat fourth-quarter estimates, have strengthened investor confidence. Additionally, China’s central bank’s announcement of a reserve requirement cut has further elevated market sentiment, positively impacting China-exposed luxury firms and metal miners.

Short-Term Market Forecast

Considering the robust earnings reports and positive PMI data, the short-term outlook for European markets appears bullish. However, investors remain attentive to the European Central Bank’s rate decision and its implications for future market trends. The UK market also shows an optimistic trend, supported by strong earnings and positive developments in the Chinese economy.

Dax Index Technical Analysis

The Dax Index continues to climb on Wednesday as it pulls away from the major support cluster formed by the 50-day moving average at 16444.86 and the minor support at 16427.00.

It is now in a position to challenge recent tops at 16963.47 and 17003.28. A trade through these levels could trigger an acceleration to the upside.

FTSE-100 Index Technical Analysis

The FTSE-100 Index is also posting solid gains on Wednesday but this market still faces a so-called “Wall of Resistance”, formed by the 50-day moving average and the 200-day moving average at 7561.16 and 7565.88, respectively.

After overcoming minor resistance at 7524.87, the market could surge into the Wall of Resistance and face an initial round of selling. However, overtaking this area will be a bullish development especially if the 50-day moving average crosses to the strong side of the 200-day moving average.