DAX Index, FTSE 100, STOXX 600: Positive UK GDP, US Inflation Outlook Boosts European Shares

Key Points

• European stocks rise on UK economic growth
• Burberry’s woes contrast sector gains
• US PPI data to influence market sentiment

European Markets Rise on UK Growth and US Inflation Expectations

European stock markets are trading higher on Friday as investors respond to positive economic data from the U.K. and brace for a critical U.S. producer inflation reports. Key indexes like the Stoxx 600, Germany’s Dax, and the U.K.’s FTSE-100 are all up, reflecting a broadly optimistic mood in early trading sessions.

Sector-Wide Gains Overshadowed by Luxury Sector Woes

The Stoxx 600 is enjoying a boost across various sectors, with notable increases in construction, media, and retail stocks, each climbing over 1.3%. However, Burberry’s recent profit warning, a response to declining demand, has cast a shadow over the luxury sector. The iconic British brand’s stock fell sharply, pulling down peers like Kering, LVMH, and Christian Dior.

UK Economy Shows Resilience, US Inflation Data Looms

Encouragingly, the U.K. economy demonstrated resilience in November, with GDP expanding by 0.3%, outpacing forecasts. This growth, driven primarily by the services sector, indicates a robust economic recovery. Meanwhile, in the U.S., investors are closely watching the Producer Price Index (PPI) inflation data. December’s report showed a 0.3% monthly rise in consumer prices, surpassing predictions and potentially influencing the Federal Reserve’s interest rate decisions.

Stock Performance and Economic Forecasts

European shares are responding positively to these developments. The interest rate cut prospects from the European Central Bank (ECB) are fueling investor optimism. Moreover, stocks in rate-sensitive sectors like real estate are witnessing significant gains, buoyed by ECB President Christine Lagarde’s remarks on overcoming the toughest phase of inflation.

Outlook: Bullish Amidst Economic Recovery Signs

Overall, the European market’s outlook remains bullish in the short term. The combination of the U.K.’s stronger-than-expected economic growth and the Stoxx 600’s solid performance paints an optimistic picture. However, investors should remain alert to the ongoing luxury sector challenges and the potential ramifications of the U.S. inflation data on global markets.

Dax Index Technical Analysis

The DAX Index, with its current daily price at 16679.84, is trading above both its 200-day and 50-day moving averages, set at 15873.40 and 16213.80 respectively. This positioning indicates a bullish trend, as the index is not only above its longer-term average but also its more recent average, suggesting sustained upward momentum.

The lack of defined trend line support or resistance levels, along with the absence of minor or main resistance levels, points to a relatively unobstructed path for further gains. However, the close proximity to the minor support level at 16427.00 suggests some level of near-term volatility. With the main support level at 16208.93 also not far below, the market is showing signs of stability.

Overall, the market sentiment for the DAX Index can be considered bullish, underpinned by its performance relative to key moving averages and support levels.

FTSE 100 Index Technical Analysis