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FTSE 100, DAX 40 and S&P 500 on track for third consecutive weekly loss

Outlook on FTSE 100, DAX 40 and S&P 500 amid soaring inflation and heightened recession fears.

FTSE 100 on track to hit March low

The FTSE 100, having earlier this week slipped through its 6,966 June low, is on track to reach its March low as the ex-Governor of the Bank of England (BoE), Mark Carney, the International Monetary Fund (IMF) and also Germany’s Chancellor, Olaf Scholz, criticise the UK government’s expansionary fiscal plans.

The already under pressure FTSE 100 has thus taken another hit amid slipping US and Asian equity markets and thus remains on track to reach its March low at 6,764 within a matter of days, judging by its steep, now over 8%, descent from its mid-September highs.

Minor resistance remains to be seen between the June and July lows at 6,966 to 7,006 as well as along the one-month accelerated downtrend line at 7,022.

DAX continues to slide amid double digit inflation

The DAX 40’s swift decline by over 10% from its 13,570 mid-September high has taken it to levels last seen in November 2020 as the German preliminary September consumer price inflation (CPI) rose to an unprecedented 10% year-on-year, from 7.9% year-on-year in August, on Thursday. Monthly inflation also surged to 1.9%, far above its historical average, and illustrates that German inflation is red hot and puts further pressure on its domestic equity markets.

The DAX 40 index remains in its downward trend and is technically bearish, now that it has had two consecutive daily chart closes below its March and July lows between 12,432 and 12,386 and so far slid to 11,861, close to the September 2019 low at 11,822.
Further down lies the June 2019 low at 11,600.
Minor resistance can be found along three-week downtrend line at 12,194 and more significant resistance at the early to mid-July lows at 12,386 to 12,432.

S&P 500 remains under pressure

The S&P 500 continues its near 12% slide from its 4,155 mid-September high as traders await the highly anticipated US monthly personal consumption price data, the Federal Reserve’s (Fed) preferred inflation measure, which is expected to see a 6.1% year-on-year rise.

The downgrade of Apple Inc (All Sessions) stock by Bank of America Corp (All Sessions) and some Asian markets such as the Japanese Nikkei losing over 2% on Thursday continue to put pressure on US equity markets with the S&P 500 drifting lower towards this week’s low at 3,601, made marginally below its June low but above the 200-week simple moving average (SMA) and August 2020 high at 3,590.

Failure there would engage the 50% retracement of the pandemic bull market at around the 3,500 mark.

While the index remains below this week’s high at 3,737 on a daily chart closing basis, immediate downside pressure should remain in play.

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