Global Markets Analysis: FTSE 100, CAC 40, and Russell 2000 Navigate Challenges Post-US CPI Surge

Global Markets Analysis: FTSE 100, CAC 40, and Russell 2000 Navigate Challenges Post-US CPI Surge

Introduction:

Amidst the aftermath of a higher-than-expected US Consumer Price Index (CPI) reading, key global indices, including the FTSE 100, CAC 40, and Russell 2000, find themselves under pressure. In this analysis by IG Senior Market Analyst Axel Rudolph, we explore the charts and dynamics shaping these markets as they grapple with economic data, rate cut expectations, and upcoming earnings season.

Key Points:

1. FTSE 100 Recovery Attempts:

The FTSE 100, after touching the 200-day simple moving average (SMA) at 7,573 following the US CPI release, strives to recover. The attempt is fueled by a slightly improved month-on-month GDP reading in the UK. Resistance is noted at last week's 7,635 to 7,647 lows, with the 7,694 high acting as a crucial level to overcome for upside momentum. Downside pressure persists below 7,694, targeting the 55-day SMA and the October-to-January uptrend line at 7,548 to 7,546.

2. CAC 40 Range Trading:

The French CAC 40 index engages in range trading between 7,488 and 7,351, influenced by adjusted rate cut expectations. The focus remains on Thursday's low at 7,415, with last week's low at 7,351 as a significant support level. The index requires an ascent beyond Friday's 7,457 intraday high to revisit recent highs at 7,686 to 7,687.

3. Russell 2000 Sideways Movement:

The Russell 2000 experiences sideways movement within a narrow range, awaiting US Producer Price Index (PPI) data and the onset of Q4 earnings season. The surge in US CPI prompts a retreat from the one-week high at 1,992 to Thursday's low at 1,933. Further downside may target last week's low at 1,921. Resistance lies between this week's highs at 1,986 to 1,991, with a breakthrough required for a sustained uptrend.

Conclusion:

Global markets face challenges as they respond to the repercussions of higher US inflation. The FTSE 100, CAC 40, and Russell 2000 navigate critical support and resistance levels, with the evolution of economic data and upcoming earnings reports shaping their trajectories. Traders are advised to closely monitor key levels and remain adaptable in response to shifting market dynamics.