Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

European markets outlook: FTSE 100, DAX and CAC 40 set to slide

European equities recovery appears to be stalling and in need of direction from US markets, with the FTSE 100 slipping below 6000 levels this week, while the German DAX and French CAC 40 made minor gains.

DAX Source: Bloomberg

European equities appeared rudderless this week, desperately seeking direction from US markets, with the FTSE 100 slipping below 6000, while the German DAX and the French CAC 40 made minor gains.

Blue chips across Europe may have performed better this week had the US dollar not fallen so abruptly in value after Federal Reserve chairman Jerome Powell informing onlookers at the annual Jackson Hole Symposium to expect longer-term easing.

The news left exporter-heavy stocks in Europe pressured by a stronger euro and pound, with sterling hitting an eight-month high against the dollar this week.

Historic levels of global stimulus have helped propped up equity markets, but the pace of recovery is clearly slowing down, with the real economy likely to take years to bounce back.

‘As markets have turned decidedly more risk-on, correction fears are mounting,' analysts at Barclays said in a note to investors.

‘A pullback is of course possible, but we remain of the view that the unwind of the massive flight to safety seen year-to-date is likely closer to the beginning than the end.’

The FTSE 100 closed at 5963 on Friday, while the DAX and CAC 40 ended the week at 13,033 and 5002 respectively.

FTSE 100: technical analysis

This serial underperformer of an index managed to recover from the dip yesterday that saw the cash session close below 6000, according to Chris Beauchamp, chief market analyst at IG.

‘But upward momentum over the previous three sessions stalled at 6060, and with the bounce from last Friday’s lows having been so ruthlessly sold, it looks like the sellers are still in charge.’

‘A fresh drop targets 5990, and then below this 5950 and 5850 come into view,’ he added.

FTSE 100 chart
FTSE 100 chart

Dax stalls below week’s highs, but closes in on pre-crisis levels

The DAX saw its recovery stall this week, but German stocks continue to fare better than their European counterparts, with the index steadily closing in on pre-crisis levels despite the myriad of headwinds.

The buyers were unable to hold the index above 13,200 earlier in the week, and while the index has bounced from intraday oversold levels, the buyers need to clear the 13,200/13,250 zone to open the way to more gains, Beauchamp said.

‘Losses this week have been contained at 13,000, so we at least have a clear range to guide our view on the next move,’ he added.

Ready to start trading indices? Open a live account or practise using a demo version today.

IGA, may distribute information/research produced by its respective foreign affiliates 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.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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. Please see important Research Disclaimer.

Please also note that 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.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing
Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.