EU growth forecast fails to lift DAX

The EU has revised its growth forecast for the region upward, but this has failed to boost eurozone stocks.

Brussels believes the eurozone’s economy will grow by 1.8% in 2014 and 1.8% in 2015, which is a 0.1% revision upward for both years. The German equity benchmark initially moved higher following the announcement, but was dragged back lower by the sell-off in global equities.

Yesterday, the FTSE 100 closed at its highest level in 14 years and the S&P 500 hit a personal best. There was therefore a bit of profit-taking in index futures this morning, but equity markets moved lower when the New York Stock Exchange opened at 2.30pm (London time). The financial markets do not move in straight lines so it is not unusual to see a pull-back from time to time.

The DAX is still in an uptrend, trading above the 50-, 100- and 200-day moving average over the past 18 months, though it is currently trading down 0.4% at 9670. As Brenda Kelly stated last week, the 9590 level is providing support. If we take out the recent high of 9720, it could put 9800 in sight.

DAX chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.