DAX Stock News Today – Has the correction started? – Explica .co
Europe closed a negative week, dragged down by losses in the US stock markets. The Dax it lost 1.56% and the EURO STOXX 50 lost 1.05%. The IBEX 35 lost 1.89%, closing at 9,030 points.
In the US, the DOW JONES Ind recorded the largest weekly losses (-3.45%), followed by the Russell 2000 (-2.04%) and by the S&P 500 (-1.91%).
Only the NASDAQ 100 was saved, which achieved a weekly rise of 0.37%.
All sectors of the S&P 500 have fallen this week with the exception of Technology which has risen a modest 0.08%. The worst was Materials, which fell 6.25%, followed by Finance, which lost 6.20% (source SPDRs).
In the following weekly variation table of the Big Tech and the main US banks:
Very complicated and puzzling.
The FED has instilled fear in investors, it has sunk stocks, gold and bond yields. It has strengthened the dollar and oil remains bullish.
Investors at the beginning of the week were waiting in case after the meeting of the Federal Open Market Committee (FOMC – Federal Open Market Committie) and the subsequent press conference by Jerome Powell (President of the FED) showed some change in monetary policy or if there was any clue about inflation and interest rate hikes or about tapering .
After the FOMC meeting, attention was focused on the important quarterly maturity of derivatives on Friday, June 17, which usually leads to strong movements in indices.
The FED, which was described as aggressive, kept interest rates stable but raised its general inflation expectation to 3.4%, 1% higher than the March projection, although it continued to affirm that inflation expectations are transitory. Powell said that “some of the dynamics associated with the reopening are increasing the possibility that inflation will turn out to be higher and more persistent than we anticipate.” This change in stance is somewhat contradictory to recent assertions by the Fed that the recent rise in inflation is temporary.
On the other hand, he did not refer to when the bond buyback program will begin to cut but acknowledged that the matter had been discussed, all of which produced fear in the markets that responded with falls in the prices of stocks and indices and rises in prices. yields of public debt, with the exception of the NASDAQ 100 that after a first fall recovered part of the losses and on Thursday it rose strongly.
Fed officials indicated that rate hikes could come in 2023, while in March they had said hikes were not planned until at least 2024 and point to two hikes in 2023.
With all this something does not add up, if inflation is “transitory” then why raise rates twice in 2023? Simply because they do not think that inflation is going to be transitory. Even Harnett, Chief strategist of Bank of America Merrill Lynch thinks that what is coming is a period of stagflation (economic stagnation with rising inflation and unemployment).
But the concerns that the FED instilled in investors on Wednesday about what they will do from now on did not stop here, on Friday the 17th the president of the St. Louis Fed, James bullard, told CNBC that he sees an initial interest rate increase in 2022 as inflation rises, which fueled declines in markets, for example the Dow Jones Ind fell 1% after his statements.
However, on the same Friday, the chairman of the Federal Reserve of Minneapolis, Neel kashkari, said it wants to keep the Fed’s short-term benchmark interest rate near zero at least until the end of 2023 to allow the job market to return to pre-pandemic strength. He also believes that higher prices are being driven â ???? â ???? by the reopening of the economy and will decline as supply restrictions ease.
Traders speak of the Fed gradually reducing bond purchases, but in reality the US central bank increased its asset purchases last week to the highest in three months. The Fed’s balance sheet crossed the $ 8 trillion level for the first time, reaching the $ 8.064 trillion level.
With what has been said, the confusion, fears and doubts of the investors are logical.
Quadruple hour witch
It refers to the expiration of futures and options on indices and stocks and occurs on the third Friday of each quarter (March, June, September and December).
The one of Friday 17 was important there was a massive expiration after which the indices accelerated the falls that they dragged during the week.
10-year Treasury bond
The yield on the 10-year bond, which is the benchmark Treasury value, fluctuated widely last week. It started the week at 1,460%, rose just after the FED meeting to 1,594% and then fell back to 1,443% at the close of Friday.
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The dollar index rose from 90.49 to 93.325 since Wednesday and the EUR / USD traded at the end of Friday at 1.1803, it has been falling since May 26 after trading at a high of 1.2263. It is down from the May high of 3.41%.
The euro loses strength against the dollar after the Fed pointed out two rate hikes in 2023, while the ECB pointed to negative rates for a long period.
It has suffered a collapse from $ 1,916 on June 1 (in 14 sessions) of 8.12%, closing at 1,765.6
The next 10 days
Next week we will continue to be aware of inflation through the employment data that will be published on Friday the 25th due to its importance for the FED in terms of what they can mean in terms of inflation.
The rebalancing at the end of the second half that could also cause strong movements.
In short, we do not expect to have a quiet end of the month and volatility could continue to increase.
TECHNICAL SITUATION: Has correction started?
It is the question that investors are asking themselves and from the point of view of the long term in the monthly chart we cannot say yes, since we have to wait for the close of the candle to do so, there are still 8 trading days left and there are many.
The candle that is forming the DOW JONES Ind on the monthly chart looks very ugly but it is still bullish, until the candle closes on the 30th. Furthermore, it is forming divergences with the rest of the indices.
On the weekly chart, there are return (bearish) formations in all indices except the Nasdaq 100 and Composite, but only the DOW JONES Ind has lost control, the rest of the indices are still holding and divergences could lead to further rises .
S&P 500, DOW JONES Ind, NASDAQ 100 and Russell 2000 on weekly chart
In the very short term, on the daily chart, the S&P 500 is about to break the control level at 4,167 but it has remained at the limit, in the case of breaking it the next downward target would be 4,055 and if it lost it we would have to consider correction and estimating levels by Fibonacci retracements. While the NASDAQ 100 is still bullish, the DOW JONES Ind has lost its level of control and is oversold and the Russell 2000 still on the side.
Each index is in a different situation, pointing in different directions so that no forecast can be made, the most likely being that they could correct in time, that is, developing a side.
S&P 500, DOW JONES Ind, NASDAQ 100 and Russell 2000 on daily chart
The main European indices in the weekly chart have left a figure back in one day, dragged down by the US indices that constantly exert a direct influence on them.
DAX,EURO STOXX 50, CAC 40 and IBEX 35 on weekly chart
Banks have exerted an important weight in the European slowdown and decline. AFTER the expiration of derivatives, the European stock markets fell violently causing a poor weekly close, despite having achieved new all-time highs for both the Dax and the Euro Stoxx 50.
In the Ibex 35, the weight of the banks and the strong bearish divergence between Santander and BBVA caused serious falls in the Spanish selective, causing the clear loss of the bullish guideline that was supporting it. The loss of 8,989 would make us change the way we see things.
DAX,EURO STOXX 50, CAC 40 and IBEX 35 on daily chart
On Friday there were significant losses of 1.78% in the Dax and 1.80% in the EURO STOXX 50. The technical aspect of Europe has gone from being better than in the US to being worse than there.
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DAX Stock News Today – Has the correction started? – Explica .co
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