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Indices recover ahead of US inflation data

Outlook on FTSE 100, DAX 40 and Nasdaq 100 ahead of US CPI data and second quarter earnings season.

​FTSE 100 continues to be sidelined

The FTSE 100 is expected to follow Asian markets higher which have generally snapped their recent sell-offs as investors look ahead to Wednesday’s US consumer price index (CPI) for June which is anticipated to remain hot.

The index is trying to break through its two-month resistance line at 7,175 and reach Tuesday’s high at 7,225, a rise above which would engage the 5 July high at 7,289 which remains key for the medium-term trend.

Below the May low at 7,157 sits this week’s low at 7,095 which is to act as support. Further down lies the 6 July low at 7,070.

DAX tries to recover

The recent sell-off in the DAX 40 amid worries that the planned 11 to 21 July maintenance shutdown of the Nordstream 1 pipeline might be extended by Russia once it is supposed to re-open, took the index to 12,653 on Tuesday before it closed near its open. It has thus formed a Doji on the daily candlesticks chart which denotes indecision.

A drop through 12,653 would eye the late June low at 12,617. Further down sits key support at 12,432 to 12,386, the March and early July lows.

Only a rise and daily chart close above last week’s high at 13,021 would be positive for the DAX 40 and could lead to an extension towards the mid-June low at 13,220 unfolding.

Nasdaq 100 under pressure ahead of US inflation data

The publication of US inflation data is expected to drive equity indices over the next few days with prices to rise 8.7% in June, from 8.6% a year ago, and 1% month-on-month.

The Core Consumer Price Index (CPI) is expected to rise 5.9% year-on-year and 0.6% month-on-month.

Over the last few days, the Nasdaq 100 slid back to its breached April-to-July downtrend line, which because of inverse polarity, now acts as a support line at 11,600 ahead of the second quarter (Q2) earnings season with major US investment banks such as JP Morgan and Citigroup reporting on Thursday and Friday.

A slip below Tuesday’s low at 11,684 would nonetheless lead to the May low at 11,490 being back on the map. Further down the late June and early July lows can be found at 11,358 to 11,317.

Resistance above Tuesday’s high at 11,998 can be spotted at the late June and last week’s highs at 12,180 to 12,227.


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