DAX Index, FTSE 100, STOXX 600: Markets Pressured as ECB Decision Looms

Key Points

• European markets cautious ahead of ECB decision.
• Mixed stock movements reflect investor uncertainty.
• ECB rate hold impacts Stoxx 600, DAX, FTSE-100.

European Markets Await ECB Decision

European markets are trading lower as investors brace for the European Central Bank’s (ECB) monetary policy decision. The Stoxx 600, Germany’s DAX, and the UK’s FTSE-100 all show declines in early trading. Bank stocks are down, while chemical stocks show gains.

At 12:04 GMT, the broad-based Stoxx 600 is trading 475.59, down 1.50 or -0.31%. Germany’s Dax Index is at 16821.12, down 68.80 or -0.41% and the UK’s FTSE-100 is trading 7513.44, down 14.23 or -0.19%.

ECB Rate Decision in Focus

The ECB is expected to maintain interest rates at their current high levels. Market analysts predict a 60% chance of a rate cut in April, based on LSEG data. This decision follows positive euro zone composite services and manufacturing PMI data, indicating an uptick in business activity.

Stocks on the Move

Nokia shares have risen 6% following a profit forecast for the second half of 2024. In contrast, IG Group shares dropped 9.2% due to a fall in profits amid soft market demand. These movements reflect a cautious approach by investors ahead of the ECB’s decision.

Central Bank Decisions and Bond Yields

The ECB’s decision, expected to maintain the 4% rate, and President Christine Lagarde’s subsequent press conference are highly anticipated. German 10-year government bond yields have risen to a two-month high, reflecting market sensitivities to central bank policies.

Earnings Season and Economic Data

The ongoing earnings season sees a projected 8.8% year-on-year drop for STOXX 600 companies. German business morale has unexpectedly worsened, and Spanish industrial prices have fallen, adding layers to the market outlook.

UK Market Under Pressure

In the UK, stocks like IG Group and St James’s Place are under pressure following disappointing earnings. Elementis shares, however, surged on potential acquisition news. The FTSE 100 and FTSE 250 show marginal movements as investors await the ECB’s decision and U.S. GDP data for further market direction.

Short-Term Market Forecast

The market is cautiously bearish in the short term, with attention focused on the ECB’s rate decision and U.S. GDP data. These factors, combined with mixed earnings reports, are likely to influence market trends in the coming days.

Dax Index Technical Analysis

The Dax Index is taking a breather on Thursday as it hovers near a pair of major tops at 16963.47 and 17003.28.

Although the German benchmark remains in a strong position to challenge those tops and resume the uptrend, it is also susceptible to a steep correction into the support cluster formed by the uptrending 50-day moving average at 16475.77 and the minor bottom at 16427.00.

FTSE-100 Index Technical Analysis

The FTSE-100 Index is trading lower after a second attempt to overtake minor resistance at 7524.87 failed to attract enough buyers to continue the rally.

Overcoming this level is key to building strength and attracting enough buyers to drive the market into the 50-Day Moving Average at 7563.14 and the 200-Day Moving Average at 7564.58.

Overtaking the resistance cluster at 7563.14 – 7564.58 will change both the intermediate and long-term trends to up. However the inability to overcome 7524.87 makes the index vulnerable to a pullback with a potential retacement back to the support area at 7404.08 to 7401.87.