Indices retreat ahead of busy calendar week and start of earnings season

​FTSE 100 opens lower on back of generally weaker Asian markets

The FTSE 100 opened lower on the back of generally weaker Asian markets after China’s market regulator imposed fines on Alibaba and Tencent for not complying with anti-monopoly rules and as the UK conservative party begins the search for a new prime minister and successor to Boris Johnson in earnest.

The FTSE 100 last week remained below its two-month resistance line at 7,215 which should continue to act as resistance while the current slide eyes major support at 7,012 to 6,966, made up of the June and last week’s lows.

On the way down minor support can be spotted at the 1 July low at 7,100 and also at the 6 July low at 7,070.

DAX begins week on the back foot

Last week’s near 5% recovery rally in the DAX 40, following a swift decline, either paused or ended at Friday’s 13,021 high as the index begins this week by opening lower amid worries that the planned 11 to 21 July maintenance shut down of the Nordstream 1 pipeline might be extended by Russia once it is supposed to re-open.

This would have a very negative impact on the European economy as it is the single biggest pipeline carrying Russian gas to Germany.

The publication of key consumer sentiment, inflation and industrial production data, both in Europe and the USA, may also weigh on indices this week.

Slips may find support between the late June low and 6 July high at 12,688 to 12,617. Further down sits key support at 12,432 to 12,386, the March and early July lows.

Only a rise and daily chart close above last week’s high at 13,021 would be positive for the DAX 40 and could lead to an extension towards the mid-June low at 13,220 being seen.

Dow expected to begin week on a weaker footing ahead of Q2 earnings season

The Dow Jones Industrial Average’s recovery from last week’s 30,356 low took it to last week’s high at 31,509, to not far below its April-to-July downtrend line at 31,605.

Ahead of the US banking giant JP Morgan kicking off the second quarter (Q2) earnings season on Thursday amid a week of US inflation, sentiment and industrial production data, the Dow is likely to begin this week on a weaker footing.

Potential support is seen at the 7 July low at 31,040 and also at the 6 July trough at 30,762 as well as at the May low at 30,637 while resistance can be found at Friday’s 31,509 high.

A rise above 31,509 would engage the three-month downtrend line at 31,605 and the late June high at 31,885.