FTSE Places Largest Rally Leg on Record – Faces Technical Hurdle

Posted on May 5, 2025May 5, 2025 by Gino Bruno D'Alessio

Friday marked 15 winning sessions, the longest on record, today’s market looks set to extend a day further.

FTSE up nearly 2%
IAG leads the pack
Technical hurdles on the day chart

The [[FTSE]] gained 1.95% this morning as investors see hopes for global trade deals after Trumps comments.

Trump Opens Possibility of Trade Deals

Talking to reporters on Air Force One, Trump stated that US officials would be meeting with many countries on trade deals, including China.

When reporters asked if any trade agreements would be announced this week, Trump said “that could very well be”.

The US President also suggested he did not expect to reach an agreement with all countries. But rather would be “setting a certain tariff” for those trading partners in the next weeks.

IAG Leads Index Higher

IAG, the holding company of British Airways and Iberia, rose 5.01% this morning leading the UK’s blue-chip index.

Airliners have profited over the past weeks from a drop in crude oil prices over the past week. Today’s news that OPEC added another 411k barrels per day for June sent WTI lower by 3%.

FTSE Day Chart

Technical View

The day chart above for the FTSE shows a market still in a bear trend with prices below the Ichimoku cloud.

The market is facing resistance from the cloud at 8,668, while a close at current levels would have broken the resistance at 8,585 (black line).

Immediate support is at 8,481 (orange line), which coincides with a previous all-time high from May 2024.

To consider a bull trend, we would need to see prices above the cloud, including the Lagging line (yellow line).

To confirm the strength of the bull trend I would want to see the RSI above the level of 70. We would get further confirmation of the trend if there is a close above the previous highest candle body at 8,834 (blue line).

DAX Rally Holds Despite Weak Data & Tariff Concerns

Posted on April 30, 2025 by Gino Bruno D'Alessio

German GDP Q1 contracted by 0.2%, while Retail Sales also declined in March by 0.2%. Tariffs remain a concern, but investors hope for negotiations.

GDP QoQ Q1 Expands 0.2% Contracts 0.2% YoY Q1
Preliminary Retail Sales YoY Rise 2.2%
Investors see increasing possibilities for tariff negotiations

The [[DAX]] traded higher again this morning, gaining 0.22% as investors brushed aside weak retail sales and GDP data.

Domestic Economy and Trade

The German stock market is heavily reliant on international trade. DAX companies are large exporters and have relied on China and the USA to bolster profits as the domestic economy wanes.

The tariffs announced by Trump caused a large shock in global markets and the DAX saw a large drop. However, investors are betting that negotiations will come through eventually.

For the EU to place reciprocal tariffs on US goods would only hurt even more than it does. The logical way out of the tariff war would seem to eliminate tariffs altogether.

Germany is a net exporter with a massive surplus; February’s trade balance was €17.7 billion surplus.

DAX Live Chart

[[DAX-graph]]

Weak Data and ECB Policy

Even if the German economy has been contracting over the past 2 years, the DAX has continued to rally. The momentum has come from loosening ECB policy and strong exports.

Today’s data again showed how fragile the German economy is. Although retail sales showed an increase YoY, they were still less than forecast. Moreover, retail sales MoM for March fell by 0.2%.

GDP data for Q1 also showed another contraction, keeping the trend of a shrinking economy on track.

Apart from some initial volatility, the DAX took both of those releases extremely well. The focus is more on ECB policy and tariff negotiations.

Trump’s announcement that auto tariffs would not accumulate with other tariffs gave investors some relief. There is also a lot of talk of negotiations with a large number of countries, giving the perception that deals will be made.

ECB would also help the cause; the central bank may need to quicken its easing pace if tariffs remain.

Lower interest rates in the Eurozone would further weaken the euro and allow for some of the tariff hikes to be offset.

FTSE Muted After Consumer Confidence Drop Outweighs Retail Sales Jump

Posted on April 25, 2025April 25, 2025 by Gino Bruno D'Alessio

GfK reports UK Consumer Confidence dropped more than expected, while Retail Sales showed an unexpected rise.

GfK Consumer Confidence -23
Retail Sales ex fuel MoM up 0.5%
BoE pessimistic on growth

The [[FTSE]] opened slightly higher today in pre-market trading but failed to maintain momentum after the bell. The index is now trading down 0.18% on the day after weaker consumer confidence.

Contrasting Consumer Data

The FTSE fails to follow its peers higher today, as the DAX and CAC both post gains of 0.65% and 0.21% respectively.

GfK Consumer Confidence for April showed a drop to -23 from -19 in March. The research firm said a turbulent financial market and rising energy costs were the main reasons.

Today’s data is the lowest since December 2023, which contrasts with the sharp increase in consumer spending for the same month.

Retail Sales unexpectedly jumped across the board. Sales ex Fuel MoM jumped 0.5% when economists had forecasted a drop of 0.4%.

The all-inclusive Retail Sales MoM also jumped higher than forecasts at 0.4% compared to expectations of a decline by 0.4%.

Nicholas Found, head of commercial content at Retail Economics commented:

“Retailers face an uphill battle to protect margins, sustain investment, and navigate an increasingly complex trading environment,”

FTSE Live Chart

[[FTSE-graph]]

UK Retailers Subdued Forecast

British retailers posted gloomy outlook statements this month; Tesco and Sainsbury’s, the UK’s 2 largest food retailers warned profit growth was unlikely in 2025.

JD Sports also added to the negative sentiment warning of little to no growth even before taking into account the potential impact of tariffs.

BoE Pessimistic on Growth

Governor Bailey said on Thursday that he expected a shock to growth caused by US tariffs and retaliatory tariffs from other countries.

Other members have stated that a trade war could cause deflation, the market has now priced in a 25-basis point interest rate cut at the next MPC meeting on May 8.

The move would bring the central bank rate down to 4.25% from 4.5%, which is still much higher than its peers in the Eurozone.

However, the latest inflation data shows a decrease from 2.8% to 2.6% in March, continuing the trend from 3% in January.

DAX: Strong Ifo Numbers Fail to Support Correction Rally

Posted on April 24, 2025 by Gino Bruno D'Alessio

As stock investors wonder on Trump’s next move, stronger than expected Ifo numbers aren’t enough to keep the relief rally going.

Ifo Business Climate at 86.9
Trump may reduce tariffs on China
German Finance Minister hopes for tariff reduction

The [[DAX]] opened lower this morning, trading down 0.87% after gaining nearly 4% from the start of the week.

Ifo Numbers Show Optimism

Today’s Ifo Business Climate printed at 86.9 up from last month’s number of 86.7. And more importantly, higher than the forecast decline to 85.2.

Ifo Current Conditions improved from 85.7 last month to 86.4 in April and beat forecasts of a decline to 85.5.

Ifo Expectations, on the other hand, declined to 87.4 from 87.7 last month but still beat expectations of a drop to 85.

Optimism remains high as investors are still hoping for a generalized bilateral agreement for a reduction in tariffs.

Exports account for around 45% to 50% of German GDP, showing just how important a positive trade deal is for DAX companies.

Economic growth in German has been contracting over the past two, while the DAX has set one record after the other over the same period.

Trump’s Flip-Flopping

While Trump is accused generally of flip-flopping from one stance to another the markets react with extreme measures.

True it may be the US presidents is showing considerable turnarounds in many policy stances. However, I see a negotiator at the table and like all negotiations some drastic hands might be played.

The German Finance Minister has joined the chorus of other EU leaders in calling for a bilateral reduction in tariffs.

If that agreement were to materialize it would be a big win for US exports, which have been penalized compared to EU exports.

But it would also be a big win for DAX companies who have their largest trading partner in the USA.

BOJ’s Ueda Says He Will Continue to Raise Rates, Finance Minister Denies Currency Manipulation

Posted on April 18, 2025 by Gino Bruno D'Alessio

The US has blamed countries for currency manipulation to expand imports, yen weakening has taken part in trade negotiations.

Japan core inflation came in higher than expected at 2.9%
BOJ’s Ueda tells Parliament he will raise rates to reach 2% inflation target
Finance Minister Kato says currency manipulation will be discussed with USA

The [[NIKKEI225]] had its best week in 3 months as trade tariff fears subsided in hopes negotiations can come to a positive conclusion. Today’s rally of 1% makes a total weekly gain of 3.41%.

BOJ Set to Hold Rates Steady

The governor of the BOJ told parliament today that the central bank would pursue policy to reach its 2% inflation target.

The market has widely discounted the next policy meeting on April 30 – May 1 will keep interest rates on hold at 0.5%.

Today’s inflation data was mixed, with overall Inflation YoY slowing pace to 3.6% in March from 3.7% the previous month.

However, Core Inflation YoY increased from 2.7% previously to 2.9% in March. This inflation metric is more similar to the Core CPI which the BOJ follows closely in its decision making.

The next data for Core CPI is out on April 22, just a week before the policy meeting and might bring some surprises.

Currency Manipulation

The finance minister also spoke to parliament today and said that the government was not involved in weakening the yen.

Katsunobu Kato’s comments came after accusations from the US government that Japan intentionally depreciates it currency.

“Japan does not manipulate the currency market to intentionally weaken the yen, as seen by the fact our latest action was to conduct yen-buying intervention.” Kato stated to parliament.

Kato is scheduled to visit Washington next week for the G20 finance ministers and the IMF meetings.

Analysts expect Kato to meet with his US counterpart Treasury Secretary Bessent for bilateral talks on the sideline of the scheduled meetings.

Bessent has also said he is looking forward to talks with Kato on trade tariffs and non-tariff barriers, in a hint of currency manipulation.

Kato said he was aware that the US wanted to discuss exchange rate concerns, without adding anything as to what they might debate.

DAX Opens Higher, Awaits ECB Decision Today – Tariff Woes Linger

Posted on April 17, 2025April 17, 2025 by Gino Bruno D'Alessio

The market is widely expecting the ECB to cut rates by 25 basis points, Siemens Energy Jumps on earnings.

The [[DAX]] opened up 0.63% on the day as investors gain confidence in a positive outcome of the trade tariff negotiations. The index is led by a surge in Siemens Energy.

ECB Interest Rate Cut & Trade Balance

The DAX has been outperforming most peers despite 2 years of contracting GDP Growth. DAX stocks are heavily reliant on trade, as seen in the large trade surplus.

Exports account for around 47% to 50% of German GDP, it’s largest trading partners being the USA and China.

Trade tariffs are, therefore, a large concern for DAX investors. The ECB can help with its monetary policy by cutting interest rates.

Lower interest rates should weaken the euro and offset trade tariffs. A 25% trade tariff would be easily offset by a decline in [[EUR/USD]] of an equal proportion.

At today’s meeting the market has discounted a 25 bp cut in interest rates, from 2.65% to 2.40%. I doubt there will be any surprises, and what may cause volatility is the forward guidance from Lagarde at the press conference.

Siemens Energy & Tariff Concerns

Siemens Energy released earnings yesterday showing its best profit margins since Siemens AG spun off the business in 2020.

Second quarter profits increased more than 5-fold to €906 million, for a profit margin of 9.1% compared to forecasts of 6.2%.

The company raised its outlook for fiscal year 2025 to 4%-6% from 3%-5% previously.

Siemens Energy stocks were up over 11% this morning leading the DAX higher, the next best performer is Zalando up only 0.62%.

Investors are still weighing the possibilities of trade negotiations taking a positive turn. The best scenario I see would be the elimination of tariffs bilaterally.

Adding the ECB rate cut to the mix would then allow for further trade-fueled momentum for the DAX

DAX Continues Recovery Thanks to Touted Tariff Relief on Autos

Posted on April 15, 2025 by Gino Bruno D'Alessio

German stock continue bullish momentum on automakers but the DAX remains in bearish territory.

Trump suggests he may consider modifying auto tariffs
VW, BMW, and Mercedes all up over 3%
Technicals on day chart remain bearish for DAX

The [[DAX]] is up 1.36% this morning after gaining 1.28% in yesterday’s session. However, the trend remains bearish after dropping over 11% in the first week of April.

Trump Tariffs On & Off

Trump slapped 25% tariffs on automakers for imports from Canada and Mexico and caused a rout in German auto stocks.

All German auto manufacturers have plants in both countries that serve the US market.

The US President has now stated there might be some modifications to these tariffs. He said he might exempt the auto industry to allow time for manufacturers to adjust.

VW is up 3.91%, BMW 3.59%, and Mercedes 3.27% on the day. Auto parts maker Continental is also up over 3% on the day.

The relief might be temporary, as relocating whole plants from one country to another take considerable time. And it seems unlikely that Trump would allow an exemption to run that long.

DAX Live Chart

[[DAX-graph]]

Technical View

The chart below for the DAX shows prices still below the Ichimoku cloud and in a clear bear trend.

The market correction that took place last week met with the resistance of the cloud, as I expected.

The next level of major resistance is at 21,600, which coincides with the bottom of the cloud. Above that, the next level of resistance would be the base of the consolidation area from the last rally at around 22,382 (green line).

That level of resistance also coincides with the top side of the cloud. To the downside, the first support level is at 20,531 (orange line), which coincides with a previous high.

FTSE Continues Helter Skelter Ride as Tariffs Remain the Concern

Posted on April 11, 2025April 11, 2025 by Gino Bruno D'Alessio

Stocks head south again as tariffs weigh more than better than forecast economic data.

GDP Growth MoM 0.5%
Manufacturing production MoM 2.2%
BoE says tariff effects on rates are not clear

The [[FTSE]] opened down this morning and attempted a rally in pre-market trading. The bullish mood was quickly wiped out sending the FTSE down 0.91%.

Economic Data Better than Forecast

GDP Growth came in higher than forecast, MoM printed at 0.5% compared to 0.1% predictions, and last month’s 0% growth. Other data also outperformed expectations:

GDP Growth YoY: 4%, expected at 0.9%
Industrial Production: 5%, expected at 0%
Manufacturing Production: 2%, expected at 0.2%

The FTSE rallied initially on the back of some bullish data, but concerns about the effects of tariffs remain the main driver.

Investors are still cautious about the possibility of a full-blown trade war, and the 90-day pause for most countries isn’t seen as a solution.

What remains to be seen is how negotiation proceed globally and for the UK in particular. The UK was hit with lower tariffs than the EU, and there is likely a simple way out of this situation, eliminating tariffs on US goods.

FTSE Live Chart

[[FTSE-graph]]

BoE Deputy Governor Tariff Implications Uncertain

The deputy governor Sarah Breeden said that the impact from tariffs on UK inflation was uncertain, and therefore also the implications for interest rates.

Stating that “Expenditure switching by US consumers away from UK goods, combined with weaker global demand due to potential counter tariffs and supply chain disruptions would be expected to weigh on UK activity,”

She believes that overall, tariffs are likely to lower UK growth, and that it’s also too early to estimate the impact on UK inflation.

“I think it’s too early to call the overall impact on inflation for the UK and hence the appropriate monetary policy response at this stage.”

Breeden also added that there had been a large global shift since the last MPC meeting in March, when it kept interest rates on hold.

DAX Posts Largest One-Day Gain Since Crisis of 2008

Posted on April 10, 2025April 10, 2025 by Gino Bruno D'Alessio

German stock market reacts to 90-day reprieve on all tariffs, as Goldman Sachs lifts recession call.

China gets slapped with 125% tariffs
Other countries get a 90-day exemption
Technical outlook remain weak for DAX

The [[DAX]] posted a massive rally yesterday of 8.89% in a reaction to the news Trump has suspended tariffs for 90 days.

Trade War on Hold Not Over

Trump decided to put most tariffs on hold, as countries have come forward to offer negotiations. China on the other hand has been handed even higher tariffs at 125%.

While it seems the trade war may be averted, since most countries have stated their intention to come to negotiations on tariffs. There is a lingering risk that those negotiations may not produce the desired results.

The US president said that China is going to figure out a solution for tariffs. A lot remains to be seen as to how willing China will be to take measure that could affect its positive trade balance.

As all this plays out, Goldman Sachs lifted the recession call it had made just over an hour earlier.

DAX Live Chart

[[DAX-graph]]

Economic Data and Trade Balance

Economic data from Germany has not been backing up the performance of the DAX for the past 2 years.

Valuations have increased over the past years, the P/E average for the DAX was 14.2 in March 2022, going to a high of 17.5 in March 2024. The current P/E average for the index is 16.15%.

While GDP Growth has shown 2 years of contractions, the only metric keeping companies’ books in the black has been exports.

The trade balance has expanded from a surplus of €87.6 billion in 2022 to a surplus of 238.6 billion in 2024.

The US is Germany’s largest trading partner with a trade surplus of €70 billion in 2024.

Technical View

The day chart below for the DAX shows a market in a bear trend with prices below the Ichimoku cloud.

Yesterday’s massive one-day rally hit the resistance of the cloud, and today’s momentum is indicating a technical correction. Very common after a large move to see some profits taking, leading to a reversal.

The next support level is at 20,531 (orange line), while major resistance is found at the bottom of the cloud.

FTSE Enters Bear Trend on Trump Tariffs and Domestic Concerns

Posted on April 8, 2025April 8, 2025 by Gino Bruno D'Alessio

UK stocks experience largest 2-day slide since Covid epidemic, could be ready for a correction.

LSE logo outside building

FTSE loses 8.65% in 2 sessions
UK will not relax fiscal rules
Reeves budget weighs on employer costs

The [[FTSE]] opened higher today by 0.57% after losing 8.65% in the previous two sessions. At one point yesterday, the FTSE index was trading down 5.7% on the day, for a total loss of 11.2% over two days.

Government Spending and Reeves’ Budget

Reeves’ budget, which introduced higher employment costs, more taxes, and strict spending rules has played a large role in the FTSE’s week performance in March.

While the effects of the budget still linger, the newly imposed retaliatory US tariffs have sent a reverberating shock to the stock market.

Pundits are calling for PM Starmer to loosen spending rules, which he could do by declaring an economic shock.

However, the prime minister has stated that the spending rules, aimed at balancing the budget by 2029/30, are in place to create stability.

During a meeting at a Jaguar Land Rover factory, he stated that “the first thing to do is not put aside our fiscal rules, but to remind people why we put them there in the first place.”

FTSE Live Chart

[[FTSE-graph]]

FTSE Day Chart Enters Bear Trend

The day chart below for the FTSE shows a market in a clear bear trend. Price is below the Ichimoku cloud, and the Lagging line (yellow line) has followed down below the cloud in confirmation.

The 2-day drop, between Friday and Monday, is the worst 2-session decline since the Pandemic in 2020.

Also worthy of note, is yesterday’s candle broke below a very strong support level of 7,994 (red line). This level was tested 3 times in 2024 and recovered each time.

Yesterday’s close was on the support level of a previous dip from April 2024 at 7.753 (yellow line).

With the RSI dipping down to 14, showing how high the momentum is to the downside, there may be room for a correction from here.

The next resistance is at 7,910 (gray line), with the major resistance at 7,994 (redline).

ftse set for rebound after heavy losses