GER40

concerns over economic growth and inflation linger

UK inflation has continued to surge at a rate that a 50-bp hike now appears the more likely move at the BOE’s next meeting.

The DAX is against the ropes on recession fears, ahead of several key data points from Germany, Europe and the US today.

Barring a notable spell of risk-on, I’m keeping an eye on potential bearish setups on the DAX and FTSE 100 whilst they remains below key resistance levels.

Nothing has changed fundamentally to suggest the markets have bottomed out

Despite a false break of 13k last week, I see the potential for the DAX to continue lower and break that key level.

We’re watching how the DAX holds up for today’s IFO report – given it saw ‘no signs of a recession’ in May and markets now fear a global recession.

With the US on public holiday we could be in for a quieter session, although with sentiment remaining fragile then we see the potential for DAX to fall further.

Sentiment has been boosted by some forecast-beating company earnings and after the BoJ decided to defy a global shift towards tighter monetary policy

A solid close at the session high on the DAX yesterday reached our initial bullish target, and increases our hopes that we have seen a corrective low.

News that the West were discussing a ban of Russia’s oil imports made for another lively start to the week, with futures falling and sending gold and WTI markedly higher.

Lockdown fears re-emerged in Euro on Friday to send equity markets lower and leaving an ominous candle on the DAX just off its record high.

The Euro Stoxx 50 broke out of a bullish continuation pattern yesterday and continues to outperform the DAX, yet the latter could play catchup as bulls appear to be accumulating.

German’s IFO report is the main economic report in today’s macro calendar, and Euro has caught a bid ahead of it.