DAX, DOW and FTSE Edge higher as markets regain calm

  • DAX 40: Higher edges despite poor German trade data.
  • FTSE100: Gains as Energy Stocks Lead the Way.
  • DOW JONES: Flat as USA celebrates Independence Day.

DAX 40: rising edges despite lackluster German trade data

The Daxopened higher in European trade before paring gains as the session progressed. Germany recorded its first monthly trade deficit in three decades after the unexpected fall in exports in May with TThe German economy was heavily export-oriented.The €1bn shortfall was the first since 1991, with cross-border sales down 0.5%. At the same time, imports increased by a higher than expected 2.7%.

The highlighted numbers the disruption caused by Russia’s invasion of Ukraine and China’s continued pandemic shutdowns. German Economy Minister Robert Habeck told German media last week that the government was concerned that Russia would refuse to reopen the North Flow 2 pipeline, a displacement that could cause energy shortages on the winter. In such a case, energy prices would come under further pressure, pushing the Eurozone further into recession.

Sector allocation remains mixed with utilities and financials leading the way, while real estate lagged in the red, posting losses of 1.9%.

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DAX 40 Daily Chart – July 4, 2022

Source: IG

From a technical standpoint, last week finally saw a weekly candle close below the Key psychological level 13000. The daily candle however, closed like a hammer while at the same time a potential forming the bottom of the tweezers which, in theory, should signal more upside ahead. We have yet to test the year-to-date lows, indicating that downward pressure on prices remains.

Key intraday levels worth watching:

Support Areas

Areas of resistance

FTSE 100: Gains as energy stocks lead the way

The FTSE started the week in the green as investors settle into trading and the markets regain their calm after a torrid first half. The first-order index has been boosted by oil inventories as crude prices rose due to supply issues.The the index was lifted by energy stalwarts Harbor Energy Plc, BP PLCand shell PLCwhich increased by 4.1%, 3.9% and 3.8% respectively.

By keeping pressure on the index, the UK faces its own gas challenge as planned strikes at Britain’s largest compound fuel pipeline cuts supplier to Moscow. According to the British Chamber of Commerce (BCC), UK businesses are set to raise prices further, further exacerbating the cost of living crisis. The BCC warned that “red lights were starting to flash” on its economy dashboard.

FTSE 100 Daily Charts – July 4, 2022

DAX, DOW and FTSE Edge higher as markets regain calm

Source:GI

The FTSE bounced off the 7080 support zone on Friday before closing like a hammer as the weekly candle closed indecisive.

Friday’s close was just below the 38.2% fib level with a break above today potentially opening a retest of the trendline and the 61.8% fib level around the 7390 area. With the indecisive weekly candle and fundamental outlook, the price remains under downward pressure.

Key intraday levels worth watching:

Support Areas

Areas of resistance

DOW JONES: Flattened as the United States celebrates Independence Day

Jhe Dow opened lower in premarket trade on Independence Day before rallying to trade flat. Activity will be limited on Monday, given the July 4 holiday in the United States, and ahead of the highly anticipated monthly US jobs report. Recent economic data added to signs that the U.S. economy, a key driver of global growth, is cooling amid aggressive Fed policy tightening, so Friday’s nonfarm payrolls report will be studied carefully to determine the performance of the labor market, taking inflation/mandate into account.

Dow Jones Daily Price Chart July 4, 2022

DAX, DOW and FTSE Edge higher as markets regain calm

Source: IG

From a technical point of view, we pushed below our key psychological zone 31000 (grey box on the chart) and had a daily candle below. However, the decline was capped as we bounced off the 23.6% fib level on Friday, closing as a bullish engulfing candlestick. The price remains under pressure and we are currently trading above the 31000 level. Today’s US holiday may lead to lower volatility, but an upside break could lead us to test the resistance of the trendline that lines up with the 61.8% fib level.

Main intraday levels that are worth watching:

Support Areas

Areas of resistance

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

Contact and follow Zain on Twitter: @zvawda

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