DAX PERFORMANCE-INDEX (.GDAXI) – European markets slip back ahead of crunch ECB meeting
European shares retreated from recent peaks on Monday as investors paused before launching into a week packed with economic data and the European Central Bank’s first policy meeting of the year.
Recurring fears of a hard Brexit and bets that the Bank of England will cut interest rates hit share prices on London’s FTSE 100 blue-chip index.
Dublin
The Iseq index tracked many of its European peers with a marginal decline of less than 0.2 per cent. Trading volumes were much thinner than usual, however, due a public holiday in the United States.
The biggest gainer on the Dublin index was troubled exploration company, Providence Resources, which this month appointed a new chief executive following the resignation before Christmas of Tony O’Reilly jnr. It rose 8.3 per cent to about 6 cents per share on the back of a surge in crude prices, which spiked after Libya scaled back production.
AIB performed poorly, finishing the session down by 4.3 per cent to €2.81. The bank’s share price has struggled since analysts predicted recently that it would cut its dividend payout for 2019.
Permanent TSB, down 2.5 per cent to €1.03, and Bank of Ireland, down 1.3 per cent to €4.65, followed AIB into the red.
London
The main FTSE 100 index, which hit a near six-month high in the previous session, gave up 0.3 per cent. BAT weighed the most, while Shell and BP weakened despite a jump in crude prices.
The FTSE 250 was 0.2 per cent lower, with Capita dropping 4.2 per cent after UBS downgraded the stock.
Also weighing on sentiment were comments from UK finance minister Sajid Javid that Britain would not commit to sticking to European Union rules in post-Brexit trade talks. Still, both benchmark indexes avoided any major shocks as overall trading volume remained thin, with the US markets closed.
Though sharp moves were scant, premium tonic maker Fevertree sank 27 per cent on its worst day ever after warning that annual revenue growth would be below its expectations following subdued trading over Christmas.
Intu Properties, which shed more than 70 per cent in value last year amid a string of bankruptcies on Britain’s High Street, ended 1 per cent lower after saying it was targeting an equity raise. Its shares had earlier tumbled as much as 10 per cent to a record low, while those of peer Hammerson gave up 3.7 per cent.
Defence company BAE Systems outperformed the blue-chips with a 3.7 per cent gain after saying it would buy two units being offloaded due to the merger of US rivals Raytheon and United Technologies.
Europe
The pan-European Stoxx 600 index was down about 0.1 per cent, after ending at a record high last week on optimism around US-EU trade talks. Market activity was thin on Monday because of the holiday in the US.
The benchmark European index has risen about 2 per cent so far this month, as investors bet on a recovery in global growth amid the cooling of US-China trade tensions.
Comments from ECB chief Christine Lagarde at the central bank’s first policy meeting for the year on Thursday will be a point of interest later in this week. The bank is expected to keep the deposit rate unchanged after cutting it in September for the first time since 2016.
On Monday, the retail subindex was the worst-performing sector, with Switzerland’s Dufry leading losses with a 4.5 per cent drop.
Air France dropped to the bottom of the Stoxx 600 after Davy Research downgraded the stock citing short-term pressures from its restructuring.
German stocks bucked the trend, rising about 0.2 per cent on strength in financials. Electronic payments service provider Wirecard was the biggest percentage gainer on the DAX.
Technical Indicators
Overall, the bias in prices is: Upwards.
The projected upper bound is: 13,810.65.
The projected lower bound is: 13,303.74.
The projected closing price is: 13,557.19.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 72.4061. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 62.81. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 43 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 87. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.
Rex Takasugi – TD Profile
XETRA DAX PF closed up 22.811 at 13,548.940. Volume was 34% below average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
13,503.83013,550.83013,487.21013,548.940 52,882,444
Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 13,437.02 13,254.03 12,461.85
Volatility: 9 12 16
Volume: 72,401,488 75,452,416 85,218,200
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
XETRA DAX PF is currently 8.7% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .GDAXI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .GDAXI and have had this outlook for the last 8 periods.
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