Indices rally post 75bps Fed rate hike and accommodating comments
Outlook on FTSE 100, DAX 40 and Nasdaq 100 post Fed’s fourth consecutive rate hike by 75bps and as chair, Jerome Powell, said a slowdown in the pace of increases may be on the cards.
FTSE 100 breaks through key resistance
The FTSE 100 finally managed to break through its key 7,349 to 7,374 resistance area, made up of the late June and 20 July high as well as the 200-day simple moving average (SMA). The index was boosted by stronger US and Asian equity markets after the Fed delivered another 75-basis point (bps) rate hike, taking the fed funds rate to 2.25%-2.5%.
A rise and daily close above 7,374 would confirm a double bottom with an upside target coming in around this year’s highs at 7,621 to 7,688.
The index remains technically bullish in the short-term while it stays above Thursday’s low at 7,199, following last week’s first bullish week in a month.
Immediate minor support below last week’s high at 7,349 sits between Friday’s 7,231 low and the 7,225 mid-July high, with further support lying at Thursday’s low at 7,199, a currently unexpected drop through which would void the current bullish outlook and instead target the May low at 7,157.
DAX is gunning for key resistance at 13,444 to 13,447
The DAX 40 is heading back up towards its 13,444 to 13,447 June 21 and current July highs, having recovered from Tuesday’s 13,030 low.
The index rises to a lesser degree than other markets, though, as Russia’s reduction in the flow of gas through the re-opened Nord Stream 1 pipeline to 20% casts a shadow over the German economy.
Nonetheless, while 13,030 underpins, another attempt at overcoming the 13,444 to 13,447 resistance area may be made, a rise above which would engage the mid-June high at 13,676. If also exceeded, a medium-term bullish reversal could lead to a several week-long rally taking the DAX 40 back towards its March-to-June highs at 14,712 to 14,927.
On the way up lies the mid-May low at 13,685. Support below Tuesday’s low at 13,030 can be found at the 8 July high at 13,021 and also at the 19 July low at 12,823.
Nasdaq 100 rallies post FOMC rate hike
The Nasdaq 100 is rallying amid the Fed’s fourth consecutive rate hike, taking fed funds to 2.25%-2.5%.
Fed chair, Jerome Powell’s comments that it will become appropriate to slow the pace of increases depending on the inflationary and economic outlook triggered a global relief rally in equities.
The fact that the Nasdaq 100 revisited its June to July ascending triangle line and that it acted as support ahead of Wednesday’s rally makes the current advance towards the 12,670 22 July high more solid. Once the 12,670 high has been exceeded, the June peak at 12,942 should be in focus. A sustained summer rally taking the index to the May high at 13,554 may currently be in the making.
Support below Wednesday and last Friday’s lows at 12,239 to 12,319 are seen at 12,227 to 12,180, with further minor support found along the 55-day simple moving average (SMA) and at Tuesday’s low at 12,048 to 12,036.
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