Home Forex European shares slipped at the end of the week on Friday, with the DAX posting its worst weekly performance since October

European shares slipped at the end of the week on Friday, with the DAX posting its worst weekly performance since October

by SuperiorInvest


  • European stock indexes posted narrow losses on Friday to end another week of declines.
  • Davos wrapped himself in little cues from politicians.
  • A tantrum is underway as investors retreat from overblown hopes of a rate cut.

European stock indexes fell on Friday as investors left the World Economic Forum (WEF) in Davos, Switzerland with less upbeat headlines from the European Central Bank (ECB). ECB policymakers have been working overtime this week, dampening market expectations of an imminent rate cut by the ECB. As inflation in the European economy continues longer and longer, the ECB is limited to cutting rates for now.

ECB President Christine Lagarde make a significant effort to avoid discussions Monetary Policy during her scheduled remarks during the economic summit in Davos, but noted during a sideline interview with Bloomberg that the market’s inflated expectations for a rate cut by the ECB may be hindering rather than helping progress in the fight against inflation.

ECB Lagarde: The ECB’s aggressive rate cut bets are not helping

European stocks retreated on Friday as investors were reluctantly forced to shelve their bets on an ECB rate cut following a lack of supportive statements from Davos. Most indexes posted their worst declines in months this week, and bullish momentum continues to hang on misguided market expectations.

Germany’s DAX closed largely flat on Friday, down a paltry 0.07% and down 12 points at €16,555.13. France’s CAC 40 fell almost 40 points to close 0.4% at €7,371.64. The pan-European STOXX600 closed at €469.24, down 0.26% or 1.21 points.

London’s main share index FTSE posted a slight gain on Friday to close up 0.04% at £7,461.93, or 2.84 points, but still hit a six-week low near £7,400.00.

DAX Technical Outlook

Germany’s DAX tested a seven-week low this week and captured an end-of-week bid to close trading near €16,550.00, still lower on the week, but closing bids keep it within reach of near-term lows.

The DAX for 2024 is falling but remains decidedly higher from the last major low from the October floor bids near €14,600.00.

Intraday topside momentum was crippled by the 200-hour simple moving average (SMA) near €16,600. Next week’s bid action will face significant technical resistance due to short-term congestion between €16,700.00 and €16,750.00.

DAX hourly chart

DAX daily chart

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