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DAX, DJI and FTSE indices rise as risky assets take a breather -by Ecork

DAX 40, FTSE 100, Dow Jones Analysis

  • DAX 40: The DAX is hovering while the markets wait European Central Bank Lagarde certificate.
  • FTSE 100 Index: Moderate gains as UK economy remains under pressure.
  • Dow Jones: US stocks pay higher As the market awaits feed it Powell‘s certificate.

DAX 40: DAX hovering as markets await Lagarde’s testimony from the European Central Bank

Volatile trading on Monday as investors weighed whether last week’s sell-off went far enough to price concerns about a rate hike and slower growth.

Volatility remains high as investors look for an entry point into stock markets suffering from rising prices and fears that monetary tightening could push major economies into recession. Analysts remain divided on the inflation front, with some suggesting we could see pressure on stocks in the second quarter as inflation eases. The alternative view is that more losses will be stored because prolonged inflation and higher interest rates will have a profound effect on growth.

Add more fuelthe European Central Bank (European Central Bank) Council member Martin Kazak, a hawk, announced that the central bank will act before July 21 if the need arises. He said, “It is normal to see some increase in uncertainty and volatility. We need to live this situation with a calm head and a steady hand to show the market, what our direction is.” This comes after last weekEmergency meeting of the European Central Bank to defend the unity of the euro area. Policy makers were forced to act as a risk fragmentation in the euro area.

Data in Europe Rradiate session German Producer Prices (PPI) showed a more-than-expected 33.6% rise in May, on a yearly basis. Europe’s building and materials index fell 2.1% after Irish building insulation specialist Kingspan said it happened sIf the mood has deteriorated in most end markets over the past two months. Later in the day, Christine Lagarde will speak which could lead to some volatility in the US session.

After seeing relatively volatile prices this morning, most sectors in the DAX remained relatively flat with utilities posting a moderate gain of 1.3%. Notable movers were Beiersdorf AG and Deutsche Bank AG which gained 3.8% and 2.8%, respectively, while Siemens on the other hand fell -1% in both of its departments.

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DAX 40 Daily Chart – 20 June 2022

DAX, DJI and FTSE indices rise as risky assets take a breather

source: TradingView

Technically, we had a bearish closing candle (weekly candle) last week which closed below the major support-turned-resistance at the 13270 area. The daily candle for Friday as we can see from the chart above closed as Inverted hammer and created a inside bar pattern. The inside bar pattern is a common continuation/reversal pattern.

Having said that, price is still under pressure and our first point of interest will undoubtedly be our resistance area around 13270. A break above this level could facilitate a deeper pullback, while any rejection could see further declines below the key psychological level at 13000 .

Key levels that might be worth watching during the day:

the support Regions

resistance zones

FTSE 100: Moderate gains as UK economy remains under pressure

The FTSE 100 posted moderate gains in the European trading session, even as concerns persist over the British economy. The UK is likely to stumble into a recession as inflation picks up as the British pound retests historical lows.

However, the UK’s silver champion this year has been the performance of British stocks, which have so far held out compared to their major developed market peers. The FTSE 100 is down just 4% this year compared to the MSCI World Index with losses of 23%. According to a Bloomberg survey conducted June 13-17, most analysts expect the UK stock market to underperform the world record for the remainder of 2022.

These factors combined with political risks such as the Northern Ireland Protocol and what any changes to the EU-UK relationship could mean add fuel to the fire. On the calendar, we will release UK inflation later this week which could provide further guidance on BOE policy moving forward with the potential for further rate hikes.

The FTSE’s gains this morning were mostly attributed to the energy sector, followed by the finance sector, which posted gains of 3.56% and 2.4%, while all sectors were positive except for the real estate sector which fell 0.9%. Among the most prominent drivers of the FTSE 100, Carnival PLC was closely followed by HSBC with gains of 7.7% and 6.2%, respectively.

FTSE 100 Daily Charts – 20 June 2022

DAX, DJI and FTSE indices rise as risky assets take a breather

source: TradingView

The FTSE saw a moderate rebound this morning pushing the price slightly above the key 7000 psychological level. The price remains pressured in the back of a bearish week as fundamentals do not support any meaningful bounce yet.

If the price stays above the 7000 handle, we could see a rally towards resistance around the 7120 area, while a break below the 7000 handle could see the price make its way lower.

Key levels that might be worth watching during the day:

the support Regions

resistance zones

Dow Jones: US stocks stabilize as markets await Fed Powell’s testimony

US stocksIt was flat in the European session as the Dow was struggling to make any significant gains after the market crash last week. US Treasury futures were mixed, while there is no cash trading in the US today due to a holiday that may contribute to the lack of liquidity.

Markets are still waiting for direction after US Treasury Secretary Janet Yellen and Federal Reserve Official Governor Christopher Waller over the weekend. Governor Waller indicated that he would like the economy to slow down while noting that the unemployment rate may need to rise to control inflation.

On the calendar front, we have appearances by several Fed officials as well as the long-awaited testimony by Fed Chair Jerome Powell. Powell is scheduled to testify before the Senate Banking Committee on Wednesday and the House Financial Services Committee on Thursday. It will also pay attention to S&P Global Services and manufacturing PMIs as well as final consumer confidence in Michigan.

The DOW is trading flat to a slight higher this morning with the energy sector struggling, posting losses of 4.57% while technology is up about 1%. Among the notable companies, American Express and Boeing posted gains of 4.8% and 2.6%, respectively.

DOW JONES Daily Chart – 20 June 2022

DAX, DJI and FTSE indices rise as risky assets take a breather

source: TradingView

After the other major stocks, the Dow broke through the 30500 support area last week before recording further declines towards the psychological level of 30000. On Friday, we closed a daily candle below the 30000 level with a low of 29576 before a moderate bounce.

The price is currently trading between the psychological level of 30000 as well as the pre-virus highs at 29500 as shown in the chart. A break below 29500 could see further downside as pressure continues. A break above the 30000 level could see a short recovery.

the support Regions

resistance zones

By: Zain Fouda, Market Writer for DailyFX.com

Connect with Zain and follow her on Twitter: Tweet embed

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