DAX, DOW and FTSE Mixed as Global Growth Signals Slowdown

• DAX 40:Lower on the Back of Dismal Euro-Area Data.
• FTSE 100:Flat as Inflation Drives Up UK Debt Costs.
• DOW JONES:Flat as Markets Ponder Recession Fears.

DAX 40: Marginally Lower on the Back of Dismal Euro-Area Data

The Dax struggled in European trade this morning edging lower as dismal euro-area data fed into recession fears. While a Reuter’s poll published earlier on Thursday predicted a one in three chance of a recession in the bloc within 12 months. We had a slew of European PMI data out this morning from France, Germany and the euro-zone. High prices in the euro-zone meant demands for manufactured goods fell in June at the fastest rate since May 2020, when the covid pandemic was taking hold. The S&P Global headline factory Purchasing Manager’s Index (PMI) fell to a near two-year low of 52.0 from 54.6. German Manufacturing PMI suffered as well in a blow for Europe’s most industrialized economy declining from 54.0 to 52.0, which will undoubtedly have a negative impact on the components of the DAX 40.

The sectoral breakdown is mixed as such while individual movers are affected by numerous broker’s moves. The only notable mover was Deutsche Bank AG, which was down 4.80% for the session as we approach the US market open.

DAX 40 Daily Chart – June 23, 2022

Source: IG

From a technical perspective, we had a bearish candlestick close (weekly candle) last week which closed below key support that turned resistance at the 13270 area. Yesterday’s daily close formed a three-pin candle stick formation at the resistance area 13270 signaling a potential for further downside.

A daily candle close below the 12950 area could open up a retest of year-to-date lows. A bounce from here could lead to a retest of 13270 area.

Key intraday levels that might be worth watching:

Support Areas

• 12860
• 12750

Resistance Areas

• 13105
• 13250
• 13350

FTSE 100: Flat as Inflation Drives Up UK Debt Costs

The FTSEslipped by around 0.50% on Thursday’s European open as the UK government borrowed more than expected last month, due to surging inflation. Data released by the Office for National Statistics (ONS) showed that Chancellor Rishi Sunak borrowed another £14bn ($17bn) in May, which was £2bn higher than City economists had forecast.May’s borrowing lifted the national debt, excluding public sector banks, to £2.36tn, or around 95.8% of GDP.“Rising inflation and increasing debt interest costs pose a challenge for the public finances, as they do for family budgets,” Sunak said in a statement.

UK commuters meanwhile have had to deal with a repeat of Tuesday’s widespread rail stoppages today. The RMT union said a nationwide strike would proceed after deal talks broke down.

UK manufacturing firms have been hit by a slowdown in demand and new orders amid a looming recession, new data showed on Thursday.According to S&P Global’s survey, June’s overall composite PMI index, which tracks activity in the economy, was unchanged at 53.1, however, new order growth this month was the weakest since March 2021.

The FTSE recovered as the session wore on, trading flat-to-marginally lower as we approach the US market open. The energy sector was the biggest gainer of the session by 1.6%, while notable movers included Ocado Group PLC, BP PLC and Shell PLC with gains of 3.7%, 2% and 1.5% respectively.

FTSE 100 Daily Charts – June 23 ,2022

Source:IG

The FTSE closed as a bearish engulfing daily candle of resistance area 7150, signaling the potential for further downside. We have since retreated from resistance to hover just above the key psychological level of 7000. At this stage, we seem rangebound between resistance at 7150 and most recent support at the 6950 area. The intraday range may provide an opportunity if we cannot break the support or resistance levels at 6950 and 7150 respectively.

Key intraday levels that might be worth watching:

Support Areas

• 6950
• 6860
• 6750

Resistance Areas

• 7150
• 7330
• 7600

DOW JONES: Flat as Markets Ponder Recession Fears

US equities had a mixed premarket as an initial decline of approximately 200 points has been wiped away as we approach the US market open. This continues yesterday’s trend where US equities swung back and forth between losses and gains. Bond yields tumbled as comments by Federal Reserve Chair Jerome Powell and growth data in Europe stoked fear about a global downturn. US 10-year yield rates traded near a two-week low of 3.08%. Chair Powell accepted that steep rate increases could trigger a US recession and said the task of engineering a soft economic landing is “very challenging” in testimony to the Senate on Wednesday.

Money markets indicate diminished odds the central bank will raise rates beyond year-end, and rising odds of a rate cut from May 2023. This in part could explain the swing in US equities between gains and losses as markets debate how far the Fed will stretch its rate cycle.

On the calendar front, we still have S&P Global Composite PMI Flash, Fed Bank Stress Test Results and of course the testimony of Fed Chair Powell before the House Financial Services Committee.

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DOW JONES Daily Chart- June 23,2022

Source:IG

From a technical perspective, yesterday’s daily candle close provided no clear indication, closing indecisive. Currently range bound on a daily chart between the 31000 and 29500 areas. Unless we get a daily candle close above the resistance area (31000) or close below support (29500) we are likely to remain range bound. Intraday opportunities may exist within the range.

Key intraday levels that might be worth watching:

Support Areas

• 30420
• 30198
• 30000

Resistance Areas

• 30765
• 31000
• 31350

Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda