FTSE 100, DAX 40 and Nasdaq 100 likely to post first negative week of 2023
Outlook on FTSE 100, DAX 40 and Nasdaq 100 as these are likely to end the week in negative territory on hawkish Fed comments after two consecutive bullish weeks in early 2023.
FTSE 100 opens higher despite disappointing retail sales and a drop in consumer confidence
The FTSE 100 dropped for a third day in a row, this time by -1.1%, on Thursday but is trying to stabilise despite UK retail sales unexpectedly falling by 1% month-on-month in December following an upwardly revised 0.5% drop in November and a forecast of a 0.5% rise.
For 2022 as a whole retail sales fell 3% as rising prices and the cost-of-living crisis curbed consumer spending. The GfK Consumer Confidence indicator also unexpectedly dropped to -45 in January from -42 in December and against an expected improvement of -40.
Despite this the FTSE 100 is seen recovering from its 7,725 Thursday low and is flirting with the 7800 region whilst targeting the current January high at 7,876.
Failure at 7,725 would push the 10 January low at 7,668 to the fore. As long as it isn’t slipped through, though, the FTSE 100 remains on track to reach its May 2018 all-time high at 7,903, ahead of the psychological 8,000 mark.
DAX 40 tries to rise off Thursday’s 14,904 low
The DAX 40 swiftly dropped to 14,904 on Thursday on hawkish US Federal Reserve (Fed) member comments but is now trying to regain its losses on the back of mainly stronger Asian equity markets into the end of the week.
Tuesday’s low at 15,081 may act as short-term resistance, though. Above it sits the current January high at 15,272. Below Thursday’s 14,904 low lie the May and October 2021 as well as the January 2022 lows at 14,839 to 14,814.
Nasdaq 100 is trying to bounce off Thursday’s 11,249 low
The Nasdaq 100 is seen bouncing off Thursday’s 11,249 low despite Fed vice-chair Lael Brainard's comments about keeping policy restrictive, given her previous dovish stance, on the back of better-than-expected earnings by the likes of Netflix which beat subscriber forecasts and showed solid margins for the quarter, resulting in a 7% after hours rally.
Minor resistance comes in along the 55-day simple moving average (SMA) at 11,397 and at Monday’s 11,442 low ahead of this week’s 11,691 high.
A drop below Thursday’s low at 11,249 would put the 11,000 region back on the map. Minor support below this area comes in at the 10,940 20 December low and further support at the 10,771 10 November low.
As long as major support between the November-to-January lows at 10,670 to 10,603 holds, a medium-term bullish reversal may still take shape.
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