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Indices are at the track

Indices are at the track

Information is not investment advice

US markets rallied late on Thursday, helping to restore risk sentiment in early trading today. Stocks ended the week on a positive note, with European stocks posting a two-day decline driven by the Federal Reserve's plan to tighten monetary policy aggressively.

FTSE 100 aims for February highs

The index has overcome mid-week weakness, rising from the lows of each of the previous three sessions, and is now coming back to the February highs at 7700.

UK100 copes far better than its continental European peers lately, reclaiming much of the ground it lost in the February and March crashes and avoiding any signs of a new downward reversal.

A renewed bullish momentum would seem to be beckoning, especially after the index breaks through its February highs. From here, the 2018 all-time high at 7903 becomes the next big target, a remarkable recovery both from March 2022 low and from the sub-5000 level seen during the pandemic.

UK100H4.png

DE30 backed by dip buyers

It appears that buyers have come to save the DAX30 from falling further, at least for now.

The pullback from the late March high appears to have been halted, with the index finding support at 14,000. After the recovery from this level, the level of 15,000 will come into view, and the movement above this level will continue the recovery of losses incurred in February.

Sellers will need to see the price fall below this week's lows at 14,026, which will revive expectations of further losses and suggest that the late March high is a lower high and part of a bearish trend.

European markets continue to struggle due to their proximity to the Russian economy and fears that the conflict in Ukraine could spread.

While the FTSE 100 has benefited from its heavy oil and mining contingent, companies in the DAX feels the impact of higher prices and reduced supply, which continues to squeeze margins.

DE30Daily.png

S&P 500 rises after a late recovery

Yesterday's recovery in the S&P 500 meant that the price opened above the 200-day simple moving average (SMA), reversing some of the bearish trends that was building up after pulling back from the high at the end of March.

Additional gains here are now targeting January record highs at 4800. A bearish view is on hold for now, and a move below this week's lows at 4450 is needed to suggest a new downside.

US500Daily.png

The US reporting season is on the way. While further gains are expected, investors will watch for comments about inflation, shrinking margins hurting profitability and weakness in consumer spending due to higher commodity prices.

Now that an immediate post-pandemic recovery isn’t a problem, the question is whether the indices can hold at these levels or whether a worsening economic outlook will make further gains more difficult.

 

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