UK, EU Stocks Shrug Off Growth Concerns

DAX, FTSE 100 Talking Points:

• DAX & FTSE threaten overbought territory as stocks shrug off growth concerns
• German 40 Index leads gains in equity indices, prices remain supported by 14500 psychological support
• Growth outlook sours as China’s largest city, Shanghai enters into lockdowns, equity resilience holds.
• FTSE 100 holds onto gains despite elevated geopolitical risks

DAX, FTSE Shrug Off Rising Growth Concerns

As Shanghai enters into lockdown, a rising number of Covid-19 cases in China’s largest city has weighed on energy prices driving oil prices lower.

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With inflationary pressures on the rise, the dire situation in the Ukraine and sanctions against Russia by global leaders has exacerbated the effects commodity supply constraints and soaring energy prices, placing additional pressure on consumers.

Despite a more pessimistic growth outlook, the equity market has recently experienced a strong rebound from the March 7 lows, allowing both the FTSE 100 and DAX 40 to return to February levels (prior to the conflict-induced sell-off in the equity market).

DAX (Germany 40) Technical Analysis:

With the DAX eager to proceed along an upward trajectory, the 50-day MA (moving average) could provide additional resistance at 14,709 with the next big level holding at 15,000 and a potential retest of trendline resistance at around 15,220.

Meanwhile, if prices fall below 14,476 (the 61.8% retracement of the Feb – March move), the next level of support remains at the 23.6% retracement of the 2020 – 2021 move at 14,396.47 which paves the way for the 14,087 mark.

DAX (Germany 40) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

FTSE 100 Technical Analysis

The FTSE (UK 100) has continued to eye the key psychological level of 7,500 which continues to hold bulls at bay. As price action hovers around the 7,495 Fibonacci level (the 78.6% retracement of the Feb – March 2022 move, prices remain above 50-day MA (moving average) currently providing support at 7424.

After three consecutive weeks of gains, the CCI (commodity channel index) is threatening the upper bound of the range, a potential indication that the index may be entering into overbought territory.

In order for bullish continuation to prevail, a hold above 7,500 leaves the door open for February 2021 high a 7,687 with the next level of resistance holding at the August 2018 high of 7,790.

FTSE (UK 100) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

However, if sellers are able to drive prices below the 50-day MA, the 61.8% retracement level of the above-mentioned move provides an additional layer of support at 7,343 which could see an increase of selling pressure driving prices back towards 7,131 (the 38.2% retracement of the same move).

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707