. European Stock Futures Lower; Sentiment Weak on Central Bank Tightening Fears

European Stock Futures Lower; Sentiment Weak on Central Bank Tightening Fears

06 May 2022

DAX 40 is trading down 1.03% at 13719.60

European stock markets are expected to open lower Friday, with sentiment hit by the broad sell-off on Wall Street overnight amid fears that aggressive central bank tightening will be needed to tame soaring inflation, severely hitting economic growth.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France dropped 0.2% and the FTSE 100 futures contract in the U.K. fell 0.2%.

All three main Wall Street benchmarks closed sharply lower Thursday, with the blue-chip Dow Jones Industrial Average falling more than 1,000 points, or 3.1%, its worst daily performance since October 2020.

The tech-heavy Nasdaq Composite fell 5%, its biggest one-day percentage decline since June 2020 and its lowest finish since November 2020.

The Federal Reserve raised the benchmark interest rate by a half-point on Wednesday, its biggest hike in two decades, but fears are mounting that larger hikes will be needed to combat inflation running at levels not seen in four decades.

The Bank of England lifted its benchmark rate on Thursday to the highest level since 2009 while warning that Britain could see inflation at 10%, and the head of Germany’s Ifo institute said Friday that the European Central Bank must quickly raise interest rates to combat high inflation in the Eurozone.

Worries are also mounting about the economy in China, the world’s second-largest economy and regional growth driver, as the country’s decision-makers appeared to double down on its zero-COVID policy, a strategy that is seen upsetting global supply chains and hitting growth.  

On technical fronts DAX 40 RSI stood at 38.86 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : DAX 40 – SELL: 13723.10, TARGET: 13572.60, STOP LOSS: 13846.10