DAX edges up, FTSE 100 slips as inflation data nears.
Euro Zone’s GDP contracts, yet employment rises.
German ZEW Index boosts economic sentiment.
UK labor market cools, wage growth slows.
Euro Stocks Mixed as Inflation Looms
Investors in European markets exhibited caution with Germany’s DAX advancing modestly while the UK’s FTSE 100 retreated, all eyes on the forthcoming U.S. inflation data. This hesitancy follows a mixed bag of economic updates, with the Euro Zone’s GDP showing a slight contraction, countered by a rise in employment figures.
DAX and STOXX: Earnings and Economic Sentiment
The DAX’s gain reflects a mix of corporate success and broader economic sentiment. Notably, the German ZEW Economic Sentiment Index rose to 9.8, signaling improved investor confidence. Meanwhile, the ECB is expected to hold interest rates steady, with speculation of rate cuts emerging mid-next year. Corporate wins, like Glencore’s acquisition and Delivery Hero’s forecast hike, fueled positive movement.
Euro Zone GDP versus Employment Dynamics
The Euro Zone’s GDP shrank by a marginal 0.1%, yet employment increased by 0.3%, suggesting an atypical dissociation between GDP and employment trends. This unusual pattern underscores the complexity of the current economic landscape in the Euro Zone.
FTSE 100: Aerospace and Defense Sector Woes Versus Mining Gains
In the UK, aerospace and defense setbacks, exemplified by Rolls Royce’s shares dip, contrasted with mining sector gains, particularly Glencore’s rise after a major acquisition. Wage growth data indicated a continued challenge for the Bank of England’s inflation efforts.
UK Labor Market and Inflationary Pressures
The UK’s labor market shows signs of cooling, with a slight decrease in job vacancies and wage growth, amidst ongoing inflationary pressures. Economists suggest a gradual, not drastic, labor market slowdown, with real wage growth not expected to pick up significantly until inflation targets are met around 2025.
Dax Index Technical Analysis
Daily DAX Index
The DAX Index is currently demonstrating resilience, trading above the crucial 50-day moving average of 15287.37 and edging closer to the 200-day average at 15644.52. This proximity to the longer-term moving average suggests that the DAX is at a pivotal juncture, with potential to solidify a longer-term uptrend.
The current price rests just above the minor support level, indicating that the market is maintaining its recent gains.
With the index positioned between the minor support and minor resistance levels, the sentiment in the market could be cautiously optimistic, as traders may be looking for signs of sustained momentum to confirm a bullish trend or indications of reversal to signal a bearish turn.
FTSE 100 Index Technical Analysis
Daily FTSE 100 Index
The FTSE 100 Index is currently navigating a delicate phase, as indicated by its trading below both the critical 50-day and 200-day moving averages, at 7508.10 and 7611.96 respectively. The index’s position below these averages generally signals a bearish market trend.
Furthermore, the index is trading just below the minor support level of 7401.87, which if breached could lead to further downside towards the main support at 7206.00.
Given this technical setup, the market sentiment leans towards bearish, with investors likely to watch for a potential rebound at the minor support or brace for a further slide if the decline continues.
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.