European equities continue their irrepressible march higher
The DAX index hit a 15-month high above 16,000, supported by firm growth and the release of UK inflation data is expected to show a slight fall in March, but not enough to stop the BoE from raising rates by 25bp in May.
A mixed session for US equity markets as investors digested key earnings reports and messaging from Fed Speakers ahead of the blackout period before the next Fed meeting.
However, there are no such concerns for key European Equity Indices, which continue to climb from March lows.
DAX
The DAX, traded above 16,000 for the first time in 15 months, continuing to be supported by decelerating inflation and firm growth. However, some cracks emerged overnight.
The April ZEW business survey showed that Germany's current business conditions rose from -46.5 to -32.5. The forward-looking expectations index fell to 4.1 vs consensus expectations of 15.6. A second month of declines reflects uncertainty around the European banking system and credit availability.
The release on Friday night of flash Eurozone PMIs is expected to show a slight fall in the composite index to 53.4 from 53.7 in March on the back of banking concerns and strikes.
The UK
In the UK, the overnight release of the labour market report for the quarter to February showed the unemployment rate increased to 3.8% from 3.7%, a sign of rebalancing in the labour market. Concerningly, Average Weekly Earnings rose 5.9% YoY for the quarter to February, above the market forecast of 5.1%.
Attention now turns to the release this afternoon (4.00pm AEST) of UK inflation data for March, which is expected to show headline inflation fell to 9.8% from 10.4%.
Unfortunately, this is not enough of a fall to stop the Bank of England from raising rates by another 25bp at its meeting in May.
DAX technical analysis
Well, at the risk of sounding like a broken record, the view remains that the DAX is in the process of forming a top supported by signs of bearish divergence.
However, a sustained break back below the support at 15,700/600 (coming from the band of highs in February and March) is needed to confirm that a deeper pullback is underway towards an uptrend and horizontal support at 15,200.
Until then, allow the rally to extend towards 16,400.
DAX daily chart
FTSE technical analysis
The FTSE has gained in 14 of the past 15 sessions, rallying much further than anticipated.
While the FTSE is approaching overbought territory, there are no signs of divergence which means we can’t rule out a test and break of the year-to-date 8047 high before a retracement back towards support at 7700 commences.
FTSE daily chart
- TradingView: the figures stated are as of April 19, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
