Indices mixed amid Fed chair Congress testimony

​FTSE 100 mixed after 40-year high inflation

With Asian equity markets mostly in positive territory following a day of gains on Wall Street, the FTSE 100 is trading close to Wednesday’s cash session, having slipped on 40-year high UK inflation at 9.1% year-on-year, the country’s largest rail strike in 30-years and amid recession fears.

The index managed to find support at 7,030, above last week’s three-month low at 6,966, though. As long as it holds, a recovery back towards this week’s high at 7,193 may take place. While it caps, the recent downtrend remains firmly entrenched, however.

A drop through 6,966 and the 6,946 October 2021 low on a daily chart closing basis would lead to the March trough at 6,764 being back in the frame.

Today resistance sits between the May low and yesterday’s high at 7,157 to 7,193.

DAX tries to stabilise short-term

The DAX 40’s slip back towards last week’s 12,944 low took it to 12,967 on Wednesday before an attempt of a recovery began which has been partially thwarted by a warning by US Federal Reserve chair, Jerome Powell, that a US recession is possible, dragging European markets lower.

A fall through last week’s low at 12,944 on a daily chart closing basis could lead to the March low at 12,432 being eyed. While the 12,967 to 12,944 support area underpins, though, and once the one-month downtrend line at 13,178 has been bettered, the 14 June low at 13,220 should be revisited on the way to this week’s high at 13,444.

For the current downward pressure to diminish a bullish reversal would need to take the DAX 40 to above yesterday’s high at 13,444 and ideally also above the mid-June high at 13,676 which was made within the 13,681 to 13,743 gap.

S&P 500 tries to stabilise despite Fed chair warning of recession ‘possibility’

The S&P 500’s gradual recovery from its 3,636 current mid-June low has so far taken it close to its May low at 3,811 despite Powell evoking the possibility of a US recession in his testimony before Congress on Wednesday which is going to continue on Thursday.

While Wednesday’s low at 3,690 holds, the 3,811 May low is expected to be reached with the 12 May low at 3,860 being next in line. Further resistance can be spotted at the gap left open at 3,855 to 3,897.

Failure at 3,690 on a daily chart closing basis would put the current June low at 3,636 back into contention.