Dax 30 and UK FTSE 100 Down Again As Stock Retreat

Stock markets retreated lower today, with the German Dax around 1% lower and UK FTSE 100 around 0.5% lower on the day. The USD and safe haven currencies such as the yen and the Swiss Franc benefited from the risk-off sentiment in financial markets, while stocks ended up lower.

Dax 30 Chart Daily – Rejected by the 20 SMA

The DAX 40 hit a daily peak of 18,700 yesterday, climbing back up from its nadir of 18,380 the previous week, only to pause before the European Central Bank (ECB) meeting which will be held on Thursday. It’s expected that a 0.25% reduction in interest rates will be announced, which is positive for stock markets, since it frees some funds investors are holding in bonds.

Similarly, the FTSE 100 briefly climbed above its previous record high of 8,345 points before pulling back some of its advances. The 8,400 mark is considered the new high, surpassing the previous record of 8,480 points.

FTSE 100 Chart Daily – The Upside-down Hammer Signaled Today’s Decline

The improvement in the Chinese Caixin Manufacturing PMI for May signaled a positive outlook for the European market. The PMI increased from 51.4 points to 51.7 points, aligning with economists’ forecasts of 51.5. These positive indicators led to increased demand for riskier investments.

The German Manufacturing PMI showed an improvement last month, from 42.5 points to 45.4 points, while the Eurozone Manufacturing PMI also improved, climbing from 45.7 points to 47.3 points – slightly lower than the initial flash estimate of 47.4 points but an increase in activity nonetheless. The modest decline in the manufacturing sector suggested a robust economic environment, which in turn heightened investor interest in DAX-traded stocks.

DAX 30 Live Chart