FTSE 100, DAX 40 and S&P 500 recover despite rate hikes
Outlook on FTSE 100, DAX 40 and S&P 500 post ECB 75-basis point rate hike.
FTSE 100 follows Wall Street and Asia higher
The FTSE 100 opened up on Friday, following US and Asian markets higher as the US dollar retraces for a third day in a row and the US 10-year treasury yield pauses its ascent around the 3.30% mark.
The current end-of-week rally has taken the FTSE 100 to the 55-day simple moving average (SMA) at 7,336 with the late June and 20 July highs at 7,349 to 7,362 and then the 200-day SMA at 7,400 being next in line.
For a significant bullish reversal to be confirmed the late August high at 7,487 should ideally be taken out. Minor slips should find support along the breached one-month downtrend line at 7,316 and around the 7,300 mark.
DAX recovers in line with Asian and US markets
The DAX 40’s recovery from Thursday’s 12,688 low is taking shape despite the European Central Bank's (ECB) unprecedented 75-basis point rate hike, which itself came after a 50-basis point rise in July, and despite the central bank indicating that several more hikes are in the pipeline.
China’s inflation, which unexpectedly fell to 2.5% year-on-year in August, helped boost Asian markets which in turn aided European equity indices in their recovery.
The DAX 40 index has now definitely left its downtrend channel and is gunning for its 13,057 early September high, a rise above which would engage the 55-day SMA at 13,169 ahead of the 26 August high at 13,376.
Strong support remains to be seen between the late August and September lows at 12,706 to 12,596.
S&P 500 recovery is ongoing
The S&P 500 has left its August to September downtrend channel as the surge in US yields pauses and the US dollar is entering its third straight day of consolidation.
The index is now trading back above the 4,000 mark and is aiming for the 30 August high at 4,071, above which minor resistance can be encountered at the 4,102 5 August low.
Minor support below the 55-day SMA at 4,013 can be found at Wednesday’s high at 3,988 and further support around the 3,960 zone. Key support remains to be seen at the current September low at 3,884, a fall through which would have medium-term bearish implications and would push the June and July lows at 3,720 to 3,636 back to the fore.
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