FTSE 100, DAX 40 and Dow sell off sharply on weak US data and recessionary fears
Outlook on FTSE 100, DAX 40 and Dow following a plethora of central bank rate hikes.
FTSE 100 sell-off as BoE keeps up rate pressure
The FTSE 100 slid following the Bank of England’s (BoE) 9th consecutive rate hike as it tries to rein in soaring inflation by raising rates by a widely expected 50 basis points to 3.5%, a fresh 14-year high, and as weaker-than-expected US data triggered recessionary fears.
The index dropped to 7,409, a 3-week low, but remained within its December downtrend channel and above the 7,378 early November high and the 200-day simple moving average (SMA) at 7,334.
Immediate minor support is seen between the 7,429 to 7,421 area, made up of the mid-November high and late November low, as UK retail sales in the UK declined by an unexpected 0.4% month-on-month in November, after improving an upwardly revised 0.9% in October, helped by the impact of the additional Bank Holiday in September for the State Funeral.
While Tuesday’s high at 7,553 caps, the risk of further downside being witnessed remains in play. Failure at 7,409 would engage the early November high at 7,378 whereas a currently unexpected rise above Tuesday’s 7,553 high would target the 7,618 late November peak.
DAX 40 falls out of bed following ECB rate hike and hawkish tone
The Dax 40 fell by over 3% on Thursday as the European Central Bank (ECB) raised interest rates by an anticipated 50 basis points to 2.5% and as it, alongside other major central banks, remained hawkish by underlined the point that further tightening of policy is to be seen in 2023 to combat high inflation.
The Dax 40 is now trading in 5-week lows and may slide back towards the 55- and 200-day simple moving averages (SMA) at 13,600 to 13.573 into year end, provided that previous support, now - because of inverse polarity - resistance at the mid-November to early December lows at 14,125 to 14,129 caps on a daily chart closing basis.
Dow Jones Industrial Average drops on weak US data and recessionary fears
On Thursday the Dow Jones Industrial Average (Dow) sold off to a 5-week low, following a plethora of central banks raising their rates and remaining hawkish and as a sharper-than-expected retreat in US retail sales and manufacturing activities for November, which underscored the slowdown in the economy, worried traders.
The index dropped sharply to 33,010 and is now on track to reach the 55- and 200-day simple moving averages (SMA) at 32,457 to 32,436 as the year draws to a close.
Resistance can be spotted at last week’s 33,420 low.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Seize your opportunity
Deal on the world’s stock indices today.
- Trade on rising or falling markets
- Get one-point spreads on the FTSE 100
- Unrivalled 24-hour pricing
See opportunity on an index?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on an index?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from one point on the FTSE 100
- Trade more 24-hour indices than any other provider
- Analyse and deal seamlessly on smart, fast charts
See opportunity on an index?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
