DAX Index, FTSE 100, STOXX 600: European Markets Eye ECB Minutes, Lagarde’s Upcoming Remarks

Key Points

• Stoxx 600 Recovers with Travel Sector Boost
• DAX Gains, Watches of Switzerland Plummets
• FTSE 100 Rises, Anticipates Interest Rate Decisions

Broad-based Movements in European Markets European stocks edged higher on Thursday, with the Stoxx 600 index recovering from three consecutive sessions of losses. The index’s gain was supported by a 4% surge in travel stocks, although utilities witnessed a slight decline.

A key factor in market sentiment was the ongoing discussion at the World Economic Forum in Davos. Traders are now looking forward to the ECB Meeting minutes, due to be released at 12:30 GMT and a speech by ECB President Christine Lagarde at 15:15 GMT.

At 12:21 GMT, the broad-based Stoxx 600 is trading 469.93, up 2.22 or +0.47%. Germany’s Dax Index is trading 16536.22, up 104.53 or +0.64% and the UK’s FTSE 100 Index is at 7382.05, up 63.36 or +0.87%.

DAX Index Responds to Economic Signals

Germany’s DAX Index also showed resilience, registering a gain amidst varied market drivers. The luxury watch retailer Watches of Switzerland’s significant premarket drop, triggered by a cut in its fiscal year guidance, affected investor sentiment. This was contrasted by Richemont’s strong sales report, reflecting a mixed outlook in the luxury sector.

FTSE Index Navigates Through Challenges

The UK’s FTSE 100 Index experienced a similar upward trend, despite challenges. It struggled to bounce back from a three-day decline, influenced by the anticipation of delayed interest rate cuts and a hawkish stance from central bank policymakers. The FTSE’s performance was further impacted by shifting investor expectations around the Bank of England’s rate cut timeline.

Short-Term Forecast: Cautious Optimism

In the short term, European markets are showing signs of cautious optimism. Despite sector-specific volatility, particularly in luxury goods and utilities, overall market resilience is evident.

Investors are closely monitoring central bank policies and economic reports, with a particular focus on future interest rate decisions and their potential impact on market dynamics. This included the ECB minutes and Lagrade speech.

Dax Index Technical Analysis

The Dax Index is rebounding on Thursday, following a test of its lowest level since December 1 during the previous session. The index is holding above minor support at 16427.00, after a near touch of the 50-day moving average at 16330.25 on Wednesday.

One-day up does not change the current bearish sentiment being driven by the prospect of prolonged higher rates in the Euro Zone and a potential recession. Instead, we’d like to see the index build a support base around the 50-day in order to prove there is real buying in there. If not, the market is likely to continue to drift lower over the near-term into the 200-day moving average at 15892.80.

FTSE-100 Index Technical Analysis

The FTSE-100 Index is attempting to clawback some of yesterday’s big loss, following a test of the support at 7401.87. Although we can assume that some value-seeker buying was taking place, the move is more likely being driven by profit-taking and short-covering, following Wednesday’s plunge.

The breaking of both the 200-day and 50-day moving averages earlier this week changed the main and intermediate trend to down, so unless these levels are overtaken, we’re probably going to be in a “sell the rally” mode until a new support base is established.