European stocks ended the week broadly higher on earnings beats
- The ECB left the door open for data-dependent rate cuts, but remains tepid.
- Earnings beats helped equities shrug off Consumer Confidence miss.
- BoE, Fed the headline risks for next week.
European indexes wrapped up Friday trading firmly in the green, shrugging off a dovish European Central Bank (ECB) and a downside miss in European Consumer Sentiment surveys after the ECB left the door open for data-dependency to trigger rate cuts earlier than the central bank is currently projecting.
The ECB held rates flat this week, cautioning that discussions about rate cuts are still premature, but policymakers noted there would be room on the table for rapid, shallow cuts if Europea economic data turns sour in the near-term, helping to prop up investor sentiment that rate relief could be around the corner. The ECB currently sees no room for a rate trim until sometime in the second half of the year compared to market rate bets hoping for a first cut before June.
France’s CAC40 index surged to a record high on Friday, dragged higher by large upswings in luxury goods, with market bids pinned even higher after Barclay’s upgraded their outlook on the luxury goods sector to overweight.
Germany’s DAX index hit another record close on Friday, with gains in the German sector notably trimmed after German GfK Consumer Confidence came in at an 11-month low of -29.7 for February versus the forecast uptick to -24.5 from January’s -25.1.
Next week will see calendar headline risks with the Bank of England (BoE) and the US Federal Reserve (Fed) slated to deliver their respective rate calls and associated monetary policy statements.
France’s CAC40 gained nearly 170 points on Friday to close up 2.28% at €7,634.14, while the pan-European STOXX600 index climbed 5.31 points to end the trading week at €483.84, up 1.11%.
Germany’s DAX indexed closed at record highs but still underperformed its European peers, gaining about a third of a percent and closing at €16,961.39, up nearly 54.5 points.
London’s FTSE 100 index also climbed on Friday, adding 105.36 points to close up by 1.4% at £7,635.09.
DAX Technical Outlook
Germany’s DAX index pinned into near-term highs near €16,950.00 to hit the closing bell at its highest bids ever, and the index is up nearly 3.75% from last week’s swing low into €16,328.00.
The DAX is trading well above technical levels with the 200-day Simple Moving Average (SMA) well below current price action at €15,905.00. The index hasn’t made contact with the 50-day or 200-day SMAs since November of last year, when the German equity index rallied from €14,600.00.
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