German unemployment rises, retail sales beat expectations.
Oil, gas, and defense sectors drive market gains.
European Markets Rally on Easing Inflation
European stock markets surged on Thursday, buoyed by promising inflation data across the Eurozone. The pan-European STOXX 600 Index ascended to a 10-week high, marking a 0.42% increase at 461.04. Germany’s DAX and the UK’s FTSE-100 followed suit, posting gains of 0.39% and 0.50%, respectively.
Inflation Eases, Economic Data Mixed
Fueling this uptrend was the release of Euro Zone inflation data, indicating a decrease to 2.4% annually in November, notably below the anticipated 2.7%. This decline, a stark contrast to October’s 2.9%, signals easing price pressures. French inflation data also mirrored this trend, slowing to 3.4%, coupled with a minor third-quarter GDP contraction of 0.1%. Additionally, German inflation dipped significantly to 2.3%, exceeding expectations.
German Unemployment and Retail Sales
Germany reported a slight uptick in unemployment, reaching 5.9% in November. Concurrently, German retail sales unexpectedly rose by 1.1% in October, driven primarily by non-food items, although annual sales showed a marginal decline.
Oil and Gas, Aerospace and Defence Sector Movements
Oil and gas stocks experienced a notable 1.6% rise, amidst expectations of production cuts at the OPEC meeting. The UK’s FTSE 100 benefitted from this trend, with energy giants pushing the index upwards. Aerospace and defense sectors also showed strength, with Rolls-Royce shares reaching a four-year peak.
The market sentiment appears bullish in the short term, with easing inflation and positive sectoral performances instilling investor confidence. However, attention remains on the upcoming US PCE report and statements from the Bank of England’s MPC, which could influence future market dynamics.
DAX Index Technical Analysis
Daily DAX Index
The DAX Index, currently at 16237.15, shows a bullish inclination. It’s positioned above both the 200-day and 50-day moving averages, indicative of a positive trend. The averages, at 15677.78 and 15347.38 respectively, act as underlying support zones, reinforcing the uptrend.
The index’s rise above yesterday’s close of 16166.45 further supports this bullish sentiment. Additionally, the current price surpasses the minor support level of 16208.93, suggesting resilience and potential for further gains.
The absence of defined resistance levels implies a lack of immediate ceilings that might cap upward movements, giving room for continued growth in the short term.
FTSE-100 Index Technical Analysis
Daily FTSE 100 Index
The FTSE-100 Index is positioned below both the 50-day moving average of 7481.70 and the 200-day moving average of 7587.71, indicating a bearish sentiment in the mid to long-term trend.
It has, however, crossed above the minor support level of 7401.87, which might act as a potential floor for any downward movement. Conversely, it remains below the minor resistance of 7524.87 and well under the major resistance at 7687.48, suggesting that the index has yet to demonstrate significant bullish momentum.
This positioning implies a cautious market sentiment, leaning towards bearishness, with the potential for either consolidation or a downward trend unless it breaches key resistance levels.
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.