FTSE 100, DAX 40 and Nasdaq 100 on track for second weekly loss
Outlook on FTSE 100, DAX 40 and Nasdaq 100 as week comes to a close.
FTSE 100 drops to early September low
The FTSE 100 is once more approaching its 7,131 early September low following the Fed’s third 75-basis point rate hike in a row and the Bank of England’s (BoE) hike by 50-basis points to 2.25%, its highest level since the financial crisis in 2008.
With GfK Consumer Confidence falling to a record low of -49 in September compared to -44 in August, further downward pressure is being exerted on the index despite Friday’s mini-budget which promises to alleviate the cost-of-living crisis through tax cuts and energy caps for UK consumers to some extent.
From a technical analysis perspective, since an Elliott wave A, B, and C zigzag correction ended at its 7,515 mid-September high, the 7,131 low is expected to soon give way with the June and July lows at 7,006 to 6,966 being in focus.
A daily, and since its Friday also weekly, chart close by the FTSE 100 below its two-year uptrend line at 7,188 would have bearish implications and put the June and July lows at 7,006 to 6,966 back in the frame.
Minor resistance above the 8 September wave B low at 7,174 remains to be seen around the 7,250 mark.
While the next higher 6 September and Tuesday’s high as well as the 55-day simple moving average (SMA) at 7,324 to 7,346 cap, medium-term downside pressure should remain in play.
DAX continues its ordered descent as central banks continue to tighten
The DAX 40’s swift sell-off from last Tuesday’s 13,570 high is ongoing amid renewed rate hikes by several western central banks in the course of this week, further putting pressure on their economies and pushing these closer to a recession.
The DAX 40 index is still slipping towards its July lows between 12,432 and 12,386 as Russian president Putin imposes a draft and signals the annexation of parts of Ukraine by supporting decisions made on “referendums” in Russian occupied territories.
A fall through the July low at 12,386 would put the 50% retracement of the pandemic bull market at 12,130 on the map.
Minor resistance above the two-week downtrend line is seen at the early September low at 12,596 with further minor resistance being spotted at the 12,706 August low.
Nasdaq 100 tumbles towards June lows
The Nasdaq 100 has slipped to levels last seen in July following the Fed’s third consecutive 75-basis point rate hike as investors fret about the diminishing odds of a soft economic landing while the central bank is pursuing its aggressive monetary tightening policy to rein in soaring inflation.
The continued descent towards the June lows between 11,317 to 11,037 has so far taken the index to its 11,451 mid-July low.
Any potential short-term bounce is expected to encounter resistance at the mid-September 11,707 low. Further up sits more solid resistance between the June and early July highs at 12,180 to 12,227.
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