FTSE 100, DAX 40 and S&P 500 continue to rally post US inflation data
Outlook on FTSE 100, DAX 40 and S&P 500 ahead of US banks kicking off earnings season.
FTSE 100 now 1% away from all-time high
The FTSE 100 is now trading above 7,800, only 1% away from its all-time record high, as Thursday’s US inflation data gave another reason to buy risk.
In view is the May 2018 all-time high at 7,903, followed by the psychological 8,000 mark.
UK GDP slid by 0.3% for the three months to December, a slight improvement on the 0.4% drop for the three months to November. The British economy expanded 0.1% month-on-month in November, easing from a 0.5% growth in the previous period and beating market expectations of a 0.2% decline.
Slips may find support between the January and August 2018 highs at 7,791 to 7,796 as well as along the accelerated January support line at 7,785 and at Wednesday’s 7,773 high.
DAX 40 rally is breaking through its long-term resistance area
The DAX 40’s strong early January rally has overcome its long-term major resistance zone which was made up of the 14,814 to 15,059 May 2021 to January 2022 lows, as US inflation data on Thursday came in as expected at -0.1% month-on-month and 6.5% compared to the year before versus a previous 0.1% and 7.1%.
After five consecutive days of strong gains taking the DAX 40 to an over 7% gain within a couple of weeks, potential slips on profit taking into the end of the week may encounter the psychological 15,000 level. Much further down lies Thursday’s low at 14,534.
S&P 500 closes above 200-day SMA ahead of start of US earnings season
The S&P 500 has overcome and managed to close above the 200-day simple moving average (SMA) at 3,964 on US inflation data which came in as expected, the first time since mid-December, but faltered below the psychological 4,000 mark as the ‘official’ earnings season begins in the US later today.
It will be kicked off by major US investment banks such as JPMorgan, Bank of America and Citigroup and drive equity markets over the next few weeks.
Support below the 200-day SMA at 3,964 and Monday’s high at 3,951 comes in at the previous resistance zone now, because of inverse polarity, support area between 3,918 and 3,904. It contains the late September and October highs and the mid-November and early December lows as well as the 55-day SMA.
We expect this support zone to hold, were it to be revisited at all.
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