DAX Index, FTSE 100, STOXX 600: European Stocks Slide as Investors Eye US Jobs Report

By:

Published: Jan 5, 2024, 13:22 GMT+00:00

Start of 2024 sees European stock indices like Dax Index and FTSE 100 grappling with declines amid economic uncertainty.

In this article:

Germany 30

-0.52%

Key Points

European indices Stoxx 600, DAX, and FTSE 100 face early 2024 downturns.
Unexpected retail sales drop in Germany signals broader Eurozone slowdown.
Rising Eurozone inflation and UK house price surge challenge economic forecasts.

A Rocky Start in Europe

European markets have had a turbulent beginning to the new year. Key indices like the Stoxx 600, Germany’s DAX, and the UK’s FTSE 100 are all experiencing downturns. In Germany, this slump is partly due to unexpectedly sharp drops in retail sales, signaling a broader economic slowdown.

DAX and Stoxx 600 Under Pressure

Germany’s DAX Index and the Stoxx 600 are particularly hard hit, reflecting the impact of disappointing retail figures. The decline in these indices underscores growing investor apprehension about the economic outlook in the Eurozone.

FTSE 100’s Struggles

Similarly, the UK’s FTSE 100 is not immune to these challenges, tracking the downward trend seen across European markets. The index’s performance is indicative of the cautious sentiment pervading investors, influenced by both domestic and broader European economic indicators.

Economic Data from Europe and the UK

Recent economic reports from Europe and the UK have added to market concerns. Eurozone inflation has climbed to 2.9% in December, up from November’s 2.4%, sparking debates over potential rate cuts. In the UK, despite a challenging market environment, house prices have surprisingly risen, according to Halifax, countering analysts’ predictions of a decline.

US Jobs Report in Focus

The global market attention now shifts to the United States, with the December jobs report expected to show a 170,000 job increase. This data is crucial for investors as it will influence the Federal Reserve’s policy decisions, potentially impacting global market trends. The anticipation of the Federal Reserve’s response, combined with the latest European economic data, is contributing to heightened market volatility.

Short-Term Outlook

In summary, European markets are grappling with a mix of economic challenges and uncertainties, with investor sentiment heavily influenced by both regional and global economic reports. The upcoming US jobs data will be a critical determinant in shaping the short-term market outlook.

Dax Index Technical Analysis

Daily Dax Index

The DAX Index, currently positioned at 16483.86, exhibits signs of a downward shift, potentially signaling a move towards testing key support levels. Presently trading above both the 200-day moving average at 15836.05 and the 50-day moving average at 16021.96, the index shows a bearish tilt as it rolls over from recent highs. This reversal suggests that the recent rally may have extended too far above these moving averages to be sustainable.

The immediate focus now shifts to the minor support level at 16427.00. A breach of this support could further confirm the bearish trend, with the moving averages then becoming the next likely targets. This current trend indicates a market recalibration, as prices seek a more sustainable alignment with longer-term averages.

FTSE 100 Index Technical Analysis

Daily FTSE 100 Index

The FTSE 100 Index, currently at 7663.36, is trading above both its 200-day and 50-day moving averages, at 7567.00 and 7515.04 respectively, indicating a generally bullish sentiment.

However, the Index is approaching its minor support level at 7687.48, which it coincidentally shares with its minor resistance level, suggesting a critical pivot point in the market. This convergence of support and resistance at the same price level implies a heightened state of market indecision.

Should the Index break below this pivotal level, it might test the main support at 7524.87, bringing the moving averages into focus as potential downward targets. This scenario reflects a market that could be adjusting after extending beyond its average price range, potentially leading to a bearish shift in sentiment.

About the Author

James Hyerczykauthor

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.