FTSE 100, DAX 40 recover on solid China PMI data while Dow nears key support
Outlook on FTSE 100, DAX 40 and Dow following the publication of robust Chinese manufacturing and services data.
FTSE 100 recovers on solid China PMI data
Having slid close to its 10 February low at 7,850 on Tuesday amid stronger-than-expected French inflation data, the FTSE 100 is seen to recover on the back of robust manufacturing and services data out of China.
While the Caixin China general manufacturing PMI rose to its highest level since May 2021, the official NBS manufacturing PMI increased to its highest level since March 2012 and above expectations, boosting Asian equity indices.
The FTSE 100 is thus heading back up towards its February resistance line at 7,935, above which sits Monday’s high at 7,950. While it caps on a daily chart closing basis, the recent downward pressure should persist. Further up sit last Wednesday’s 7,973 high and the psychological 8,000 mark.
If this week’s low and the 10 February low at 7,850 were to be slipped through on a daily chart closing basis, a medium-term top would likely be formed with the late January low at 7,708 then being targeted.
DAX 40 jumps on the Asian equity indices rally bandwagon
The DAX 40 followed Asian equity indices higher as these rose on solid manufacturing data out of China pointing to a successful re-opening of the country’s economy earlier in the year.
While the February resistance line at 15,504 caps on a daily chart closing basis, the risk of a slide back towards the 15,272 to 15,185 support zone occurring, remains on the table. It contains daily lows going back to the beginning of February and failure there on a daily chart closing basis could lead to the more significant 14,992 to 14,904 mid-to-late January lows being back in sight.
Above the February resistance line sits the 23 February high at 15,556 which may also act as resistance.
Dow approaches key support zone
The Dow Jones Industrial Average has not only been underperforming its peers since the beginning of the year and for the past week has been trading in negative territory year-to-date, but is also approaching key support which is likely to underpin at least in the short-term.
It consists of the 10 November and December lows as well as the 200-day simple moving average (SMA) at 32,474 to 32,397. A fall through the 200-day SMA at 32,397 would push the November trough at 31,711 to the fore but, more importantly, would skew the odds towards the resumption of the 2022 bear market, taking the index back towards its October low at 28,630.
While no bullish reversal takes the Dow to above Monday's high at 33,194 on a daily chart closing basis, downside pressure should retain the upper hand.
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