DAX Index, FTSE 100, STOXX 600: Mixed Signals as Sector Performance Varies

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Published: Jan 10, 2024, 12:01 GMT+00:00

Stoxx 600 dips, DAX gains, FTSE falls; varied retail trends and bearish outlook for European markets amid mixed sector performances.

Key Points

European markets exhibit mixed performance.
Retail, construction, media sectors show contrasting trends.
Economic data, earnings season key to market direction.

European Markets Mixed Amid Varied Sector Performances

European markets showed mixed results on Wednesday, reflecting a cautious sentiment following a brief rally in the previous session. The Stoxx 600 Index slightly declined, while Germany’s DAX Index saw modest gains, and the UK’s FTSE 100 Index fell marginally.

Sector Highlights and Key Stock Movements

In the Stoxx 600, construction stocks dipped, contrasting with a rise in media stocks. Retail stocks experienced a slight uptick, highlighted by Greggs’ substantial gain after reporting strong sales. Conversely, Sainsbury’s shares dropped following unimpressive Christmas sales growth. Investors are now focusing on the upcoming U.S. inflation data, which could influence the Federal Reserve’s rate cut decisions.

DAX and FTSE: A Closer Look

The DAX index was slightly up, buoyed by Grifols’ rebound after its recent fall due to allegations by Gotham City Research. Davide Campari’s shares declined following a significant share and bond placement. In the FTSE 100, Greggs led the gains with a sharp rise in sales, while Sainsbury’s experienced a notable decline. The market also reflected concerns over weak metal prices impacting basic resources shares.

Economic Data and ECB Remarks Impacting Market Outlook

Recent economic data from Norway and Germany, along with ECB Vice President Luis de Guindos’ comments, suggest a possible economic contraction. These factors, along with expectations from the U.S. and European earnings season, are key in shaping market direction in the short term.

Short-Term Market Forecast

Considering the mixed sector performances and pending economic data, the short-term outlook for European markets appears bearish. The anticipation of the U.S. inflation report and corporate earnings could bring more clarity, potentially influencing a market shift. Traders should stay alert to these developments, which are likely to impact market movements in the upcoming weeks.

Dax Index Technical Analysis

Daily Dax Index

The DAX Index, currently at 16673.05, is trading above both its 200-day (15861.48) and 50-day (16139.57) moving averages, indicating an overall bullish trend. This positioning above key moving averages suggests strength and upward momentum.

The absence of trend line support or resistance points, coupled with the index being higher than the previous close of 16688.36, further affirms this bullish sentiment. However, it hovers near the minor support level of 16427.00, which could serve as a pivot point.

If the index maintains above this level, the bullish trend is likely to continue; conversely, a drop below could signal a shift in sentiment. This could create the downside momentum needed to challenge the 50-day moving average at 16139.60

FTSE-100 Index Technical Analysis

Daily FTSE-100 Index

The FTSE-100 Index, with its current daily price of 7653.49, is positioned just above its 50-day moving average of 7535.01 and the 200-day moving average of 7569.29. This proximity to both moving averages indicates a somewhat neutral to bullish sentiment, but the lack of clear trend line support or resistance suggests a potential for volatility or indecision in the market.

The index is trading near the minor support level, which also doubles as minor resistance at 7687.48, indicating a pivotal zone.

A sustained move above this level could reinforce bullish tendencies, while a drop below the main support at 7524.87 might hint at a bearish shift.

About the Author

James Hyerczykauthor

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.