Levels to watch: FTSE, DAX and Dow

News is coming through thick and fast this morning, with UK indices held back by the referendum but European markets enlivened by the arcane subject of European Central Bank voting patterns.

A man walking by a chart
Source: Bloomberg

The Federal Reserve meeting last night provided no clues on the timetable of rate increases, leaving markets to peruse the ‘dot plots’ released at the same time. Overall, the reaction to the meeting was a positive one, helped by data yesterday that shows continued weakness in US CPI. Crucially, the timetable of rate increases is dependent on data, and for the moment the data leans to the dovish side. If it starts moving in the other direction, then markets will have to reassess their position very quickly.

Meanwhile, the FTSE 100 has struggled higher as Scotland goes to the polls, but is lagging behind its European cousins in terms of gains. Indices on the continent have gotten excited over the prospect that the rotation of votes on the ECB’s governing council will provide two opportunities next year for the pro-QE crowd to get monetary easing through while Jens Weidmann of Germany doesn’t have a vote. Without German opposition, it may be easier to achieve this goal and so indices are seeing strong gains this morning.

FTSE supported by 6780

The 6814 level is the first line of resistance for the index this morning, but a close above 6830 is needed for the FTSE to surge back towards 6880.

The daily relative strength index is beginning to turn higher, suggesting that buyers are returning, but obviously the Scottish referendum will keep many on the sidelines for the time being.

Support continues to be found at 6780, and then potentially at the 50-day moving average around 6760.

DAX targeting 9800

Having cleared the 100-DMA yesterday, the DAX is now moving decisively higher, with a first target being 9800. A close above here still targets 10,000.

On the downside the 100-DMA is now support, with any drop lower suggesting support at 9600 and then 9560.

Dow upside target 17,300

Fresh all-time highs for the Dow Jones continue to support the view that the buyers are back in charge. The 17,300 level remains the upside target now that the index has apparently broken the run of sideways trading.

Any drop lower should find some buyers at the 20-DMA around 17,086 and then support at 16,910 should the index weaken further.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.