FTSE 100, DAX 40 and Nasdaq 100 rallies slow on hawkish Fed comments
Outlook on FTSE 100, DAX 40 and Nasdaq 100 ahead of Fed Chair's speech.
FTSE 100 trades close to its 4 ½ year high
The FTSE 100 briefly made a 4 ½ year high on Monday and reached 7,732 before coming off for the remainder of the day amid hawkish US Federal Reserve (Fed) comments but this morning is seen heading back up again on strong UK retail sales data.
Retail sales in the UK increased 6.5% in December 2022, accelerating from a 4.1% rise in November, but lagged behind inflation.
Were the July 2019 high and Monday’s high at 7,730 to 7,732 to be exceeded, the January and August 2018 highs at 7,791 to 7,796 would be targeted, above which sits the May 2018 all-time high at 7,903.
Support above Tuesday’s intraday low at 7,668 is to be found at the 7,649 to 7,621 early and late May 2022 highs and also at the 7,618 to 7,617 November and December 2022 highs.
DAX 40 rally loses upside momentum as German factory orders plunge
The DAX 40’s strong early January rally is beginning to lose upside momentum amid concerns following comments from Fed officials about needing to push US rates above 5% and then hold them.
Resistance can be spotted at Monday’s 14,833 high and while it caps, support between the 14,677 mid-December peak and the 14,606 early December high may be revisited.
Were a continued advance to take the index above Monday’s 14,833 high, the March 2022 high at 14,927 would be in focus.
Nasdaq 100 trades towards the upper end of its recent trading range
The Nasdaq 100’s attempt to break out of its late December to January sideways trading range was thwarted by hawkish Fed comments on Monday which sapped the energy out of the indices’ advance with it topping out at 11,307 short-term.
A slip back towards the 11,000 region may thus be at hand as Fed Chair Jeremy Powell speaks. 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 bullish reversal may take shape. For this to become probable, a rise and daily chart close above the 11,287 to 11,307 21 December and current January highs would need to occur.
But even then, good resistance between the mid-November and early December lows at 11,410 to 11,491 may prove difficult to overcome.
If it were to happen, however, the November to December peaks as well as the 200-day simple moving average (SMA) at 12,084 to 12,258 would be back in the picture.
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