FTSE 100, DAX and Dow regain ground, as the US leads the way

FTSE 100, DAX and Dow put an end to last week’s sharp losses, with US markets outperforming on the expectation of FOMC stimulus.

FTSE 100 forming a base amid stimulus hope

The FTSE 100 appears to be in a consolidation phase, in what could turn out to be a bottom given the break through trendline resistance. A break through the 6773 resistance level would provide greater confidence of further upside, with a decline below 6611 signalling a continuation of this current consolidation zone.

Hope of a worldwide stimulus plan is helping drive markets higher for the time being. That impact is lessened in the UK compared with the US, yet we have certainly seen the previous declines grind to a halt.

DAX declines turn to consolidation

The DAX has similarly slowed its decline, with the index largely consolidating since Friday's lows. We have continued to create lower lows, with the subsequent rally bringing about a move into the 76.4% Fibonacci retracement at 12,077.

We would need to see a rise through the 12,217 level to gain confidence of a more bullish period, with investors clearly skeptical of exactly how much stimulus the European Central Bank (ECB) can really introduce given the current rock-bottom rates and ongoing quantitative easing programme.

Dow Jones breaks through trendline resistance to surge higher

The Dow Jones managed to post a huge 5% gain yesterday, with the price following up a trendline break with a sharp move higher. Markets are now expecting 1% of rate Federal Reserve (Fed) cuts this year, and this is likely driving much of the differential we are seeing between US and European markets.

The pullback we have seen overnight looks like a precursor to further upside, with a rise through 26,766 providing a new bullish signal. To the downside, we would need to see a break below the 25,858 level to bring about a more bearish picture once more.


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. See full non-independent research disclaimer and quarterly summary.

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 30
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change
-
-
-
-
China 300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.