FTSE 100, DAX 40 and S&P 500 mixed post Tuesday rally
Outlook on FTSE 100, DAX 40 and S&P 500 amid UK budget and ahead of Thursday’s ECB rate decision.
FTSE 100 recovers from ten-week low ahead of UK budget
The FTSE 100 benefitted from US inflation coming in at 6% as expected on Tuesday, leading to a recovery in US stock markets ahead of Wednesday’s UK budget in which banks are likely to be in particular focus.
With fears of a run on banks in the UK having dissipated since HSBC’s purchase of SVB’s British subsidiary for £1 and Prime Minister Rishi Sunak’s assurance that there is no “systemic risk” in the UK banking sector, the FTSE 100 is in a position to possibly recover further this week as the budget is likely to introduce measures designed to support renewed economic growth in the UK.
A rise back towards the previously important support zone, now because of inverse polarity resistance area, at 7,708 to 7,724 may ensue over the coming days. It consists of the mid- to late January lows and needs to be exceeded for a medium-term recovery to become technically possible.
Support can be found at Tuesday’s 7,501 low, a fall through which isn’t expected to be seen on Wednesday but would push the 200-day simple moving average (SMA) at 7,422 to the fore.
DAX 40 recovers from key support zone
The DAX 40, although having fallen sharply on Monday, managed to find support in the significant 14,992 to 14,904 zone, made up of the mid- to late January lows on Tuesday and recovered to above the 55-day SMA at 15,160 as US CPI data came in at an expected 6.0% year-on-year.
On Wednesday the 55-day SMA may act as support, together with the 15,145 early March low, ahead of the 15,100 region before Thursday’s ECB rate decision which is still expected to see a 50-basis point rate hike to 3.5%. The DAX 40 may thus still revisit the early to mid-February lows at 15,245 to 15,276 which may act as resistance, though.
For a continuation of the October-to-March uptrend to be seen, the breached uptrend line, now resistance line, at 15,430 and, more importantly, Monday’s high at 15,486 would need to be overcome.
S&P 500 bounces back amid falling US CPI
The S&P 500 bounced off its ten-week low at 3,809 and rallied by around 1.5% as US Consumer Price Inflation (CPI) fell to 6% in February as expected, the lowest since September 2021, boosting stock markets.
The S&P 500 has thus risen back to the 200-day SMA at 3,932 which has capped the upside over the past four trading days. A rise and daily chart close above it is needed, for the next higher 55-day SMA at 3,995 to be reached, together with the psychological 4,000 mark.
Slips should find support around the 19 January low at 3,886 and at Tuesday’s 3,855 low.
A currently unexpected fall through this week’s low at 3,809 would open the way for the December low at 3,764 to be reached.
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