FTSE 100, DAX 40 and Nasdaq 100 recover, the latter even on track for a bullish weekly close
Outlook on FTSE 100, DAX 40 and Nasdaq 100 as the global banking crisis seems to abate and as the ECB hikes its rates by 50-basis points to 3.50% but may stop there.
FTSE 100 recovery underway but expected to end week sharply lower
Having slid to negative territory for the year, the FTSE 100 managed to stabilise on Thursday, as a US rescue package for First Republic Bank eased market concerns about another bank failure.
However, the FTSE 100 will nonetheless most likely see its sharpest weekly loss since February 2022. Having said that, the fact that the index stabilises around its 200-day simple moving average (SMA) could indicate that the medium-term bullish trend seen since October may still be intact, provided that no drop through the December-to-March lows at 7,310 to 7,296 is seen.
Slips should find support along the 200-day SMA at 7,422 with the 7,541 to 7,553 mid- to late December highs representing the first upside target.
Only a rise and daily chart close above Tuesday’s 7,644 high would indicate that a probable resumption of the medium-term uptrend is taking place.
DAX 40 recovers on hopes of averted banking crisis
The DAX 40, although having fallen sharply this week, managed to find support at Thursday’s 14,659 three-month low as fears of a full-blown banking crisis abate and the European Central Bank (ECB) stuck to its guns by raising its interest rates by 50-basis points to 3.50%, its sixth rate hike in a row.
The fact that the central bank indicated that it didn’t intend to hike rates further in the near future also helped European equities stabilise.
The DAX 40 may reach the early March low at 15,144 on Friday, above which meanders the 55-day SMA at 15,194. Only a rise and daily chart close above the next higher 15,273 high seen on Tuesday would indicate that the recent rout has likely ended with the resumption of the October-to-March medium-term uptrend then becoming more probable.
Minor support comes in at Monday’s low at 14,885.
Nasdaq 100
Monday’s drop in the Nasdaq 100 to its ten-week low at 11,675 due to the collapse of Silicon Valley Bank was followed by a bullish reversal in the index off the 200- and 55-day SMA as it became clear that central banks not just in the US but also in Europe were going to provide liquidity to those banks who needed it in order to avert a global banking crisis.
The fact that First Republic Bank will receive a $30 billion deposit from other major US banks helped alley investors’ fears further on Thursday with the Nasdaq 100 not only rising but also closing on a daily chart closing basis above its last reaction high at the 6 March 12,467 high.
This and the fact that the index is the only one amid its peers to likely end the week in positive territory is technically bullish price action and points towards the February peaks at 12,747 to 12,896 being in sight once more.
Support below 12,467 can be spotted at last Thursday’s 12,339 high.
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