CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

FTSE 100, DAX and CAC 40 set to end week in red amid Covid-19 fears

European equities have struggled this week, with the FTSE 100, DAX and CAC 40 all set to close in the red amid rising concerns of a second wave as Covid-19 cases continue to increase across the region.

  • European equities are set to end the week in the red amid second wave fears
  • DAX expected to break above recent highs
  • CAC 40 under pressure as daily cases above 10,000 in France

European stocks have moved lower this week as investors grow increasingly concerned about the threat of a second wave of Covid-19 cases that could lead to lockdowns across the region this winter.

As a result, the FTSE 100 ended the week 0.21% lower, but managed to stay above psychological 6000 benchmark, while the German DAX and French CAC 40 both fell 1.6% over the last five trading sessions.

According to data compile by the centre for Systems Science and Engineering (CSSE) at Johns Hopkins University, new daily cases of the virus are up to 3395 in the UK, 2194 in Germany and 10,530 in France.

However, it is Spain that is struggling most due to the resurgence in coronavirus cases, with daily cases hitting 11,291.

‘The reality of the epidemic in the community of Madrid is getting worse and we need to make greater efforts,’ senior official Ignacio Aguado said.

European airlines hit after WHO warns new cases higher than March peak

It is no secret that the travel industry has been hit hardest by the economic fallout from Covid-19, with the sector dealt another blow this week after the World Health Organisation (WHO) warned that case numbers are rising in Europe at a higher rate than during the March peak.

The news saw European airlines like easyJet, Deutsche Lufthansa and Air France-KLM saw earlier gains almost entirely eroded.

British Airways owner International Consolidated Airlines Group (IAG) meanwhile completed it €2.74 billion rights issue aimed at bolstering its balance sheet and helping the airline group capitalise on rising air travel demand.

IAG did admit, however, that passenger demand is unlikely to return to pre-crisis levels until at least 2023.

FTSE 100: technical analysis

The FTSE 100 recovered from a dip towards 6000 yesterday, but gains have stalled at 6060, with the 50-hour SMA (6058) rolling over for the first time since the beginning of this current rebound, according to Chris Beauchamp, chief market analyst at IG.

‘A drop below 6000 for the index would be a negative development, and suggest that a lower high at 6120 had been created,’ he said. ‘Further gains above 6060 target 6120.’

DAX stuck below recent highs

Despite the DAX recovery from the low early on in yesterday’s session the price has yet to mount a meaningful attempt to break through 13,300, a situation that has prevailed for over a week, according to Josh Mahony, senior market analyst at IG.

‘Dips towards 13,100 in past sessions have brought out the buyers, so we wait for a break of this range to provide clarity on the next medium-term move,’ he added.

How to trade the Weekend UK 100

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Whether you want to go long (buy) or short (sell) the Weekend UK 100 based on the above outlook, you don’t have to wait until the markets reopen on Monday to trade.

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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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