DAX Index, FTSE 100, STOXX 600: European Stocks Up as Investors Eye Fed Meeting, Inflation Data

Highlights

• European markets gain on Fed, inflation expectations.
• UK wage growth, central bank policies in focus.
• DAX bullish, FTSE cautiously optimistic amid data.

European Markets React to Central Bank Meetings and Inflation Data

European markets are cautiously optimistic as investors focus on the Federal Reserve’s policy meeting and the U.S. inflation report. The anticipation of these events has led to modest gains in major European indices, including the UK’s FTSE and Germany’s DAX.

Economic Data and Central Bank Decisions in Focus

The UK’s wage growth slowdown is a significant development, potentially impacting the Bank of England’s interest rate decisions. Meanwhile, the DAX is slightly up, buoyed by positive sentiment from the ZEW economic sentiment index, which reported a surprising improvement in German investor morale.

Inflation and Interest Rate Expectations

In the UK, the slowdown in wage growth, coupled with a stable unemployment rate, presents a complex scenario for the Bank of England. The economic data suggests a strong labor market, yet there’s pressure to manage inflation and wage growth effectively. On the other hand, the ECB’s potential interest rate cuts, as anticipated by the ZEW report, could influence the DAX’s trajectory.

Stock Performance Highlights

Key stock movements include Carl Zeiss Meditec’s surge after exceeding revenue expectations and Hargreaves Lansdown’s decline following regulatory scrutiny. These individual performances reflect broader market trends and investor reactions to corporate and regulatory developments.

Bullish Outlook for DAX and Cautious Optimism for FTSE

Considering the latest economic indicators and central bank policy expectations, the short-term forecast for the DAX Index is bullish, driven by positive investor sentiment and expectations of ECB rate cuts. The FTSE Index, however, faces a more cautious outlook, balancing strong labor market data with concerns over inflation and interest rate policies.

DAX Index Technical Analysis

The DAX Index exhibits bullish sentiment based on the analyzed technical indicators. Currently, the index stands at 16776.78, which is significantly above both the 200-day and 50-day moving averages, at 15728.13 and 15556.41 respectively. This indicates a strong upward trend, as it is positioned well above these key long-term indicators.

Additionally, the index is trading above both the minor support level of 16427.00 and the main support level of 16208.93. Being above these support levels further reinforces the bullish sentiment, suggesting the index has solid underlying support and less risk of a downward reversal in the near term.

Overall, the DAX Index’s current position relative to its moving averages and support levels points towards a continued upward trajectory, reflecting a bullish market outlook. This suggests that investors and traders might anticipate further gains, keeping an eye on any potential shifts that could impact this positive trend.​

FTSE 100 Technical Analysis

The FTSE 100 Index presents a cautiously optimistic market sentiment based on the current technical indicators. The index’s daily price of 7566.72 is marginally below both its 200-day and 50-day moving averages, at 7570.44 and 7566.85 respectively. This slight deviation below these averages indicates a neutral to slightly bearish trend in the short term.

However, the index is trading above the minor support level of 7524.87 and the main support level of 7401.87, suggesting that it still has underlying support preventing a significant downturn. Moreover, the index is currently below the trend line resistance of 7613.17, indicating that there is room for upward movement before encountering significant resistance.

Overall, the proximity of the FTSE 100 Index to its moving averages, combined with its positioning above key support levels but below trend line resistance, suggests a market that is balancing caution with underlying strength. This positioning might indicate a market waiting for directional cues, potentially leading to a more definitive bullish or bearish sentiment based on upcoming market developments and external factors.