Stoxx 600 index rises driven by tech sector gains.
DAX and FTSE 100 indices see upward trend amid easing U.S. inflation data.
FTSE 100 climbs as UK consumer price index drops significantly.
Siemens Energy shares surge following German government support.
European Markets Respond to Global Economic Data
European markets experienced gains on Wednesday, reacting to key economic data from the U.S. and China. The Stoxx 600 index saw a 0.5% rise, led by a surge in tech stocks, which added 1.9%. Telecoms, however, experienced a slight decline. Interest rate-sensitive tech stocks and miners both enjoyed significant gains, riding on the back of higher metal prices.
DAX and FTSE Indices Up Amid Soft U.S. Inflation
Germany’s DAX and the UK’s FTSE 100 indices both recorded increases, with the DAX up by 0.45% and the FTSE 100 by 0.79%. These upward movements were fueled by a softer U.S. inflation reading, which has led to speculation about a potential end to the Federal Reserve’s rate-hiking cycle. The October consumer price index remained flat, with core CPI rising less than expected.
Positive Economic News from China and UK Inflation Data
Asian markets, particularly in Hong Kong, also saw a boost following encouraging economic data from China, including better-than-expected retail sales and industrial data. In the UK, the FTSE 100’s rise was bolstered by the latest inflation data, which showed a significant drop in the consumer price index, falling to a two-year low.
FTSE 100 Performance and UK Inflation Outlook
Despite volatility throughout the year, the FTSE 100 has managed to enter positive territory for the year, aided by the recent decline in UK inflation. Core CPI also fell, potentially influencing the Bank of England’s future interest rate decisions. Investors are increasingly optimistic about a potential ‘Santa Rally’ as the year draws to a close.
DAX and STOXX: Key Movers
In company news, Siemens Energy’s shares soared by over 7% after securing significant state guarantees from the German government. Conversely, Alstom’s shares dropped sharply due to job cuts and asset sales as part of its strategy to strengthen its balance sheet. These movements among leading companies reflect the diverse responses to the current economic environment in Europe.
DAX Index Technical Analysis
Daily DAX Index
The DAX Index is currently positioned above both its 200-day and 50-day moving averages, indicating a bullish trend. The current daily price of 15696.01 surpasses the 200-day moving average of 15646.70 and the 50-day average of 15290.80, suggesting a sustained upward momentum.
Furthermore, the index sits above the minor support level of 15472.44 and is approaching the minor resistance at 15723.01. This positioning reflects a market that is testing resistance levels, and a breakthrough could signal further gains.
However, the proximity to the minor resistance also implies potential for a pullback if the resistance holds strong.
Overall, the market sentiment for the DAX Index appears bullish, with a cautious watch on whether it can surpass and maintain levels above the current minor resistance.
Daily FTSE 100 Index Technical Analysis
Daily FTSE 100 Index
The FTSE 100 Index exhibits a bullish trend, as evidenced by its current daily price of 7510.01, which is positioned between the 50-day and 200-day moving averages, at 7510.76 and 7610.90 respectively.
This placement suggests a positive medium-term outlook, reinforced by the index being above its minor support level of 7401.87 but slightly below the minor resistance level of 7524.87.
A break above this resistance could signal further upward momentum, potentially targeting the main resistance at 7687.48. Conversely, a failure to breach this resistance might result in the index retracing back towards its minor or even main support levels.
Currently, the market sentiment for the FTSE 100 Index leans towards bullish, reflecting optimism in the market, albeit with an awareness of potential resistance barriers that could impact future price movements.
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.