DAX Index, FTSE 100, STOXX 600: ECB Policy, UK Consumer Confidence Spur Optimism

Key Points

• Stoxx 600 and DAX Index rise following ECB rate decision.
• LVMH and Remy Cointreau report significant share growth.
• FTSE-100 rises as UK consumer confidence at highest since January 2022.

European Market Surge

European markets experienced a notable rise on Friday, buoyed by the European Central Bank’s (ECB) decision and fresh economic data from the U.K. and U.S. The Stoxx 600 Index climbed to 484.13, marking a 1.17% increase. Germany’s Dax Index and the UK’s FTSE-100 Index also saw gains, rising by 0.34% and 1.53%, respectively.

Sector Performance and Corporate Highlights

Most sectors traded positively, with household goods leading the charge, up by 4%. However, tech stocks saw a decline, dropping 1.2%. In corporate news, Remy Cointreau and LVMH were standout performers. Remy Cointreau’s shares surged by 15% following a smaller-than-expected decline in third-quarter sales, while LVMH’s 10% rise was fueled by robust fourth-quarter sales, indicating a resurgence in the luxury sector.

ECB Decision and Consumer Confidence

The ECB maintained interest rates at a record high, with the euro zone deposit rate steady at 4%. This decision met market expectations and was accompanied by a commitment to maintain high rates to target inflation. Consumer confidence in Europe presented a mixed picture. Germany’s GfK consumer confidence survey indicated a dip, while France saw an increase, reaching its highest level since February 2022.

UK Market Outlook and Consumer Sentiment

The UK market, particularly the FTSE 100, was poised for strong weekly gains, driven by positive earnings from European luxury firms and a boost in consumer sentiment. The GfK survey revealed that British consumers are at their most confident since January 2022, thanks to falling inflation. This improved sentiment is expected to translate into increased consumer spending.

Global Influence and UK Stock Performance

The S&P 500’s record high and talks of stimulus for China’s economy also contributed to the upbeat mood in European markets. The FTSE 250 index edged up slightly, despite a drop in Tullow Oil’s shares following a downgrade. BHP Group shares also fell after a Brazilian court ruling regarding damages for a 2015 incident.

Short-Term Market Forecast

The combination of steady ECB policies, mixed but generally improving consumer confidence in Europe, and positive corporate earnings, particularly in the luxury sector, paints a cautiously bullish picture for the short-term outlook of European markets.

Dax Index Technical Analysis

The Dax Index is up for a third straight session on Friday, challenging the all-time high at 17003.28. Investors are hoping there is enough optimism and momentum to continue the drive higher. In the meantime, 50-day moving average support at 16504.10 continues to grind higher while static support remains at 16427.00.

FTSE-100 Index Technical Analysis

The FTSE-100 Index is surging higher on Friday after crossing to the strong side of the 200-day moving average at 7563.77 and the 50-day moving average at 7567.60. Both MA’s are now new support.

The strong upside momentum generated by the move could lead to a near-term test of resistance at 7687.48, followed by the January 2 top at 7764.37.