FTSE 100, DAX 40 and S&P 500 remain bid despite stronger-than-expected UK inflation data
Outlook on FTSE 100, DAX 40 and S&P 500 as UK CPI hits 11.1%, its highest reading since 1981.
FTSE 100 holds at 200-day SMA despite stronger-than-expected inflation data
The FTSE 100 slipped back towards the 7,300 mark but continues to be supported by its uptrend channel support line at 7,288 amid stronger-than-expected UK inflation data which showed its highest reading since 1981.
The year-on-year Consumer Price Inflation (CPI) for October came in at a stronger-than-expected 11.1% versus a forecast 10.7% and 10.1% in September with core CPI hitting 6.5% versus an expected 6.4% and the Retail Price Index (RPI) rising to 14.2% versus an expected 13.6% and 12.6% in September.
Minor support below the 200-day simple moving average (SMA) at 7,323 and the uptrend channel support line at 7,288 can be found at last week’s low at 7,243. While remaining above this level, the October-to-November uptrend remains intact, though.
Since last week’s peak at 7,429 hasn’t been duplicated by the Relative Strength Index (RSI) which instead made a lower high, thus forming what is called negative divergence, it is likely that upside momentum will continue to diminish over the coming days. It also points to a possible correction lower soon being seen.
A slip through last week’s low at 7,243 would push the early November high at 7,221 and 8 September low at 7,174 to the fore. Further down lies strong support at 7,131 to 7,104, made up of the August low, early October high and 55-day SMA.
Resistance can be seen at last week’s high at 7,429, a rise above which would lead to the August and September peaks at 7,515 to 7,577 being in sight.
The DAX 40 continues to advance post better-than-expected ZEW data
On Tuesday the DAX 40 briefly dipped to 14,125 but ended the day in positive territory as the ZEW Economic Sentiment for November came in at -38.7 versus an expected -52 and -59.7 in October.
While 14,125 underpins, the index remains on track to overcome Tuesday’s high at 14,442 in which case the April high at 14,599 will be in focus. Further up the June peak can be spotted at 14,712 and the March high at 14,927.
Below Tuesday’s low at 14,125 lies the minor psychological 14,000 mark and the August high at 13,976.
S&P 500 remains bid ahead of US retail sales data
The S&P 500, despite losing a lot of last week’s strong upside momentum, has so far risen to 4,042, close to the 200-day SMA at 4,061, which remains in focus ahead of Wednesday’s US retail sales data release for October which is expected to come in at 1.0% versus 0.0% in September.
The index will technically remain immediately bid while it stays above Tuesday’s 3,952 intraday low on a daily chart closing basis.
Support below this level can be spotted between the 21 September, late October and early November highs at 3,918 to 3,913.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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