European Open: The DAX is on track for its first bearish week in five

Asian Indices:

• Australia's ASX 200 index rose by 3.3 points (0.05%) and currently trades at 7,116.10
• Japan's Nikkei 225 index has risen by 24.63 points (0.09%) and currently trades at 28,966.77
• Hong Kong's Hang Seng index has risen by 89.01 points (0.45%) and currently trades at 19,852.92
• China's A50 Index has risen by 46.46 points (0.34%) and currently trades at 13,690.34

UK and Europe:

• UK's FTSE 100 futures are currently up 14 points (0.19%), the cash market is currently estimated to open at 7,555.85
• Euro STOXX 50 futures are currently down -7 points (-0.19%), the cash market is currently estimated to open at 3,770.38
• Germany's DAX futures are currently down -41 points (-0.3%), the cash market is currently estimated to open at 13,656.41

US Futures:

• DJI futures are currently down -39 points (-0.11%)
• S&P 500 futures are currently down -21 points (-0.16%)
• Nasdaq 100 futures are currently down -7 points (-0.16%)

The US dollar continue to strengthen overnight, although at a slower pace compared to the US session, whilst JPY and CHF being the weakest majors. Japan’s inflation rate rose to its highest level in 7.5% year, yet the BOJ are unlikely to act given its within the vicinity of their own forecasts and its not expected to peak until Q4. This was the ideal catalyst for further support USD/JPY overnight.

DAX 4-hour chart:

We head towards the last trading day of the week and, around current levels, the DAX is on track for a 2-bar bearish reversal pattern on the weekly chart. The pattern could also carry some weight as it would be forming just below trend resistance, projected from its record high. Whether it marks a significant swing high remains to be seen, but we currently favour a deeper retracement from current levels at a minimum.             

The 4-hour chart remains above trend support, but with prices consolidating in the lower quarter of this week’s range – after a sudden drop from the highs – the bias is for a downside break. A break beneath 13,605 support assumes bearish continuation and brings the 14,440 – 13,500 support zone into focus, a break beneath which opens up a run for the 13,330 support zone.

FTSE 350 – Market Internals:

FTSE 350: 4197.27 (0.35%) 18 August 2022

• 223 (63.71%) stocks advanced and 118 (33.71%) declined
• 9 stocks rose to a new 52-week high, 7 fell to new lows
• 37.43% of stocks closed above their 200-day average
• 88.86% of stocks closed above their 50-day average
• 10.29% of stocks closed above their 20-day average

Outperformers:

• + 5.80% - Plus500 Ltd (PLUSP.L)
• + 4.57% - Syncona Ltd (SYNCS.L)
• + 4.29% - Workspace Group PLC (WKP.L)

Underperformers:

• -7.29% - Marshalls PLC (MSLH.L)
• -4.93% - ASOS PLC (ASOS.L)
• -4.53% - Ascential PLC (ASCL.L)

Economic events up next (Times in BST)

• German producer prices are released at 16:00 BST. Whilst it remains uncomfortably high at 32.7% y/y in July, it may have peaked at 33.6% in June and expected to fall to 32%. Baby steps…
• UK retail sales figures are also released at the same time, and given the high levels of inflation then consumption is expected to remain negative. Retail sales m/m are forecast to contract by -0.2% (-0.1% prior) and -3.3% y/y (-5.8% prior).
• Canada’s retail sales figures are then released at 13:30 BST, although far more likely to print positive figures than the UK – even if at a slower pace. Retail sales m/m are expected to fall to 0.3% from 2.2% (or 0.9% excluding autos, down from 1.9% m/m).

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