DAX Index, FTSE 100, STOXX 600: Positive Sentiment with ECB, UK Budget in Focus

Key Points

• European markets trading higher at mid-session, led by Stoxx 600
• Tech, banking sectors drive Stoxx 600; ECB decision awaited
• FTSE 100 rises, influenced by Wall Street rally, UK budget speculation

European Markets Start Week on Positive Note

European markets kicked off the week with gains, as investors in the region awaited the preliminary consumer confidence data from the euro zone for January. The Stoxx 600, Germany’s Dax Index, and the UK’s FTSE 100 Index all opened higher, reflecting a positive start to the trading week.

At 13:51 GMT, the broad-based Stoxx 600 is trading 471.52, up 2.28 or +0.49%. Germany’s Dax Index is at 16626.52, up 71.39 or +0.43% and the UK’s FTSE 100 Index is at 7463.41, up 1.48 or +0.02%.

Sectoral Performance and Key Stock Movements

The Stoxx 600 index saw most sectors trading in the green, with banks, travel, and tech stocks leading the gains. However, utilities and mining stocks experienced a slight downturn. Notable stock movements included French lottery operator La Francaise des Jeux, which surged on news of acquiring Kindred, and Swiss company Belimo, which fell due to revenue shortfalls.

Global Market Influences and US Futures

The mixed performance in Asia-Pacific markets and unchanged loan prime rates in China set a varied backdrop. U.S. stock futures remained steady, with investors looking to extend the S&P 500’s recent record high. European shares followed Wall Street’s lead, particularly in the technology sector, with significant gains in stocks like ASML Holdings.

European Central Bank’s Upcoming Decision

Investors are keenly awaiting the European Central Bank’s policy decision, with no new policy expected but any hints on rate cuts being closely monitored. The banking sector showed strength, while certain stocks like Commerzbank saw declines following analyst downgrades.

London Market Trends

In London, the FTSE 100 benefited from the Wall Street rally, despite the UK market’s limited exposure to the tech sector. Retail stocks gained amid speculation of potential tax cuts in the upcoming UK Budget. However, concerns about inflation and a potential recession linger, affecting the outlook for interest rates. Notable stock movements included Barclays and S4 Capital, both experiencing gains due to positive analyst outlooks and trading updates.

Short-Term Forecast for DAX and FTSE

In the short term, the DAX Index is likely to maintain its upward momentum, buoyed by the overall positive sentiment across European markets and the strength in key sectors like banking, travel, and technology. The anticipation of consumer confidence data from the euro zone may further influence investor sentiment. However, any unexpected shifts in the upcoming European Central Bank policy decision could introduce volatility.

For the FTSE 100, the outlook appears cautiously optimistic. The index’s growth is supported by the positive spillover from Wall Street’s rally and potential tax cuts in the UK Budget, which could boost the retail sector. However, the FTSE’s limited exposure to the high-performing tech sector and ongoing concerns about inflation and a potential recession in the UK might temper gains. The market will closely watch domestic economic indicators and policy announcements for directional cues.

Dax Index Technical Analysis

 

The DAX Index is trading at 16623.73, slightly above the prior day’s close of 16555.13, signaling a positive price shift. It is currently above both the 200-day (15902.48) and 50-day (16386.30) moving averages, indicating an upward trend. The current price surpasses the minor support level of 16427.00 and the main support level of 16208.93, suggesting robust support.

Overall, the DAX Index exhibits bullish sentiment due to its higher daily price, moving averages, and strong support levels. Monitoring trend lines will further confirm this outlook. The key area to minor on the downside is the 50-day moving average.

FTSE-100 Index Technical Analysis

The FTSE-100 Index is currently trading at 7466.73, slightly higher than the previous day’s close of 7461.94.

The index currently trades below both the 200-day moving average at 7567.79 and the 50-day moving average at 7557.02. This suggests bearish sentiment in the market.

The minor support at 7401.87 and main support at 7213.00 are essential levels to watch for potential further declines. Overcoming the minor resistance at 7524.87 will be the first sign of strength.

In summary, the FTSE-100 Index displays a bearish sentiment due to its position below critical moving averages. Monitoring support levels is crucial for assessing potential downside risks.