European Stock Futures Weaken; U.K. Political Chaos, Recession Worries Weigh

European stock markets are expected to open lower Friday, as rising bond yields reinforced expectations of an economic slowdown while U.K. political turmoil continued.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 1.1% lower, CAC 40 futures in France dropped 0.9% and the FTSE 100 futures contract in the U.K. fell 0.5%.

European equity markets are expected to follow the lead from the U.S. after the negative close on Wall Street Thursday and the losses in Asia overnight.

This followed U.S. Treasury yields rising to 14-year highs as the prospect of further aggressive interest rate hikes from the Federal Reserve, likely plunging the world’s dominant economy into recession, soured investor sentiment.

European bond yields have also climbed sharply higher Friday, including those associated with the benchmark 10-yr U.K. gilt as the political tumult in the U.K. continued with the resignation of Prime Minister Liz Truss after six chaotic weeks marred by policy shocks.

The country now faces an abbreviated leadership contest, with former finance minister Rishi Sunak the early favorite. However, even if he wins and retains Jeremy Hunt as chancellor for stability, the new PM will still have severe economic challenges to face.

U.K. retail sales slumped 1.4% on the month in September, down 6.9% on an annual basis, as consumers reined in their discretionary spending in the face of the cost of living crisis given double-digit inflation and rising interest rates.

DAX 40 Technical Analysis: Daily Chart

In the daily charts, DAX 40 is trading in an up channel. DAX 40 is currently trading above 20 days SMA & below 50 and 100 days SMA.

RSI is in buying zone which indicates bullishness. MACD is currently above zero which indicates bullishness.

Its immediate support is 12435.30 & the resistance level is at 12676.60.

DAX 40 INDEX will trade in an up channel until there is trend reversal.   

How to Trade DAX 40 INDEX this Week:

DAX 40 INDEX will follow the uptrend until there is trend reversal. So, remain bullish on DAX 40 INDEX.

TRADE SUGGESTION- BUY AT 12547.70, TAKE PROFIT AT 12676.60 AND STOP LOSS AT 12435.30