DAX Index, FTSE 100, STOXX 600: Europe Wavering Amid Mixed Corporate Earnings

James Hyerczyk
Published: Jan 31, 2024, 13:07 GMT+00:00

European stocks, including DAX and FTSE-100, vary as Fed decision looms, contrasting Santander's success with H&M's woes amid German inflation dip.

Dax Index, FTSE-100 Index, Stoxx 600 Index

In this article:

Key Points

  • Stoxx 600 fluctuates with focus on Fed and earnings.
  • Santander’s record profit contrasts with H&M’s earnings miss.
  • German inflation drop signals potential euro zone trend.

European Stocks Mixed as Fed Decision Looms

European stocks displayed a mixed performance Wednesday morning, with the Stoxx 600 index showing little change, coming off a two-year high. The market’s attention is divided between the U.S. Federal Reserve’s upcoming monetary policy decision and a series of corporate earnings reports.

At 12:48 GMT, the broad-based Stoxx 600 is trading 485.03. Germany’s Dax Index is at 16951.82, down 20.52 or -0.12% and the UK’s FTSE-100 Index is at 7673.02, up 6.71 or +0.09%.

Sector Performance and Key Earnings

Banks saw an uptick, led by Santander’s 1.1% gain after reporting record profits, while retail stocks experienced a downturn. Notable earnings include pharma giants Novo Nordisk and Novartis, and retailer H&M, which announced a surprise CEO change and missed profit forecasts, leading to a 10% drop in its shares.

German Inflation and Economic Outlook

Inflation in key German states showed a decline in January, hinting at a potential decrease in national and euro zone inflation. This development could influence European market sentiment and monetary policy in the region.

Fed’s Rate Decision and Market Anticipation

The Fed funds futures market indicates a high probability of unchanged rates. However, investors are keenly awaiting any hints of policy shifts in the Fed’s statement and Chair Jerome Powell’s comments, which could significantly impact global markets.

Short-Term Market Forecast

The European market is expected to remain volatile in the short term, reacting to the Fed’s decision and corporate earnings. The tech sector, in particular, is under scrutiny following mixed earnings results. The market’s direction will likely hinge on the Fed’s policy stance and its implications for global economic growth and inflation trends.

Dax Index Technical Analysis

Daily Dax Index

The Dax Index is edging lower on Wednesday as investors take a breather ahead of the Federal Reserve announcement, while hovering near the record high of 17003.28. A trade through this level will reaffirm the uptrend.

On the downside, there is room to tumble with the nearest support, the 50-day moving average, at 16572.50. A trade through this level changes the intermediate trend to down.

FTSE-100 Index Technical Analysis

Daily FTSE-100 Index

The FTSE-100 Index is higher on Wednesday, but inside yesterday’s range. The chart pattern indicates investor indecision and impending volatility as the index hovers just below pivotal resistance at 7687.48.

With the index trading above both the 50-day moving average at 7578.82 and the 200-day moving average at 7560.61, the intermediate and long-term trends are up, respectively.  However, there distance from the current price of 7676.57 suggests the potential for a near-term correction.

A lot will depend on whether the strong upside momentum is able to overcome resistance at 7687.48.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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