FTSE, DAX and Nasdaq surge after Powell comments
The FTSE, DAX, and Nasdaq push higher as Powell comments lift market sentiment.
FTSE 100 surges into fresh five-month high
The FTSE 100 has enjoyed yet another leg higher following comments from the Federal Reserve (Fed) chair, Jerome Powell that saw a major risk-on tone permeate throughout global markets.
For the FTSE 100 this pushed the index up through the key 7577 resistance level established in August, bringing us into levels not seen since June.
It is worth noting that we now trade within a zone of resistance which encompasses a number of major peaks from earlier in the year. With 7577 out the way, the 7647 and 7690 levels represent the next major points of resistance up ahead. With price turning lower, there is a chance we start to retrace some of yesterday’s gains.
In any case, we would need to see a decline through 7420 to mark the beginning of a bearish reversal. Until then, near-term downside is likely to be bought into.
DAX struggles to break through 14584 resistance
The DAX has pushed up into the key 14584 resistance level yesterday, with the index attempting to break from the consolidation phase that has dominated the past three weeks.
While the recent recovery does signal a likely bullish exit from this phase, a push through resistance would be taken as a signal that the bulls are set to take charge once again.
With German retail sales tumbling to a six-month low this morning, we can see that there are clear concerns over the economy as rates rise and China remains constrained.
Nonetheless, the bulls are expected to remain in charge unless price falls back below the 14124.
Nasdaq surges back towards November high
The Nasdaq has enjoyed a major move higher following Jerome Powell’s indication that the Federal Reserve plans to slow their pace of rate hikes in the face of falling inflation.
To a large extent this makes sense, as they seek to gain clarity over the implications of the recent tightening phase which should subsequently allow for a more accurate terminal rate. However, it is worthwhile noting that a slower pace of tightening is very different from an adjustment to the terminal rate.
Nonetheless, markets have adjusted to signal a lower peak of 4.75%-5%. This has helped lift the Nasdaq back towards the 12084 peak from mid-November.
Ultimately, this rebound does look to represent a potential retracement of the 13722-10432 sell-off. As such, this rebound does look likely to extend if we see price push up through the 12084 resistance level here.
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