FTSE 100, DAX 40 and CAC 40 remain bid in low volatility trading
Outlook on FTSE 100, DAX 40 and CAC 40 as China’s Covid-19 cases hit a record high.
FTSE 100 remains bid but is losing upside momentum
Earlier this week the FTSE 100 practically reached the minor psychological 7,500 mark which remains in focus as UK car production returns to growth.
It rose 7.4% in October from a year ago, though production figures remain considerably below pre-pandemic levels as global chip shortages continue to affect British car manufacturers.
While Thursday’s low at 7,441 underpins, the August and September peaks at 7,515 to 7,577 continue to be eyed but may, at least short-term, provoke failure next week.
Since US equity markets only trade for a half day over the Thanksgiving holiday weekend, European markets are expected to also trade in low volumes on what is known as “Black Friday.”
A slip through 7,441 today would engage the 7,429 11 November peak below which sits the 4 November high at 7,378. Further down meanders the 200-day simple moving average (SMA) at 7,318.
While remaining above it, the FTSE 100 is considered to be bullish, it being the only major European equity index which trades close to or in positive territory.
The DAX 40 continues to rise despite surging Covid-19 cases in China
The DAX 40 continues its steep October-to-November ascent of so far over 20% despite surging Covid-19 cases to a new record high and related lockdowns in China hurting local sentiment and global recession fears dampening demand.
The index is approaching its April high at 14,599 which may act as short-term resistance on Friday. If not, the June peak at 14,712 and the March high at 14,927 should be eyed next.
Slips should find support at the 14,442 mid-November high amid an increasingly overbought index which next week may give back some of its recent gains as US players return from their extended Thanksgiving weekend.
The CAC 40 remains on track to reach the 6,759 late April high despite recession fears
The French CAC 40 index continues to advance, albeit in a more gradual fashion than in October, despite lurking global recession fears and European Central Bank (ECB) policymakers agreeing in their October meeting accounts to stick to monetary tightening, even if this were to lead to a shallow recession.
In case of a prolonged and deep recession, which would likely curb inflation to a large extent, ECB policymakers might consider pausing raising rates, however.
For now, the CAC 40 remains on track to reach its 6,759 late April high, having so far risen by close to 20% since early October. The late April high at 6,759, together with the late March high at 6,831, offers a solid resistance area which may well cap the CAC 40’s advance in the days ahead.
Immediate support can be spotted at the 6,686 mid-November high on Friday with more important support being found at the 6,626 August peak.
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