Connect with us

Hi, what are you looking for?

Investing

CAC 40, DAX index analysis ahead of Fed, ECB decisions

The CAC 40 and DAX indices are hovering near their all-time high ahead of the upcoming Federal Reserve and European Central Bank (ECB) interest rate decisions. The German DAX rose to an all-time high of €15,922 while the CAC 40 index soared to a record high of €7,571.

ECB, Fed decisions and earnings

The DAX and the CAC 40 index have been in a strong bullish trend recently as investors reflect on corporate earnings and the upcoming decisions by the Fed and ECB. In France, luxury goods companies like LVMH, L’Oreal, Hermes, and Kering published strong financial results, helped by China’s recovery.

Meanwhile, European banks like Deutsche Bank, Societe Generale, and Unicredit have been a bit immune in the ongoing bank crisis. These banks, which are highly regulated, have higher capital requirements than their American rivals.

The next key catalyst for the CAC 40 and DAX index is the upcoming interest rate decisions. Analysts expect that the Federal Reserve will hike interest rates by 0.25% on Wednesday and then point to a pause.

The pause will be necessary for the bank to assess the impact of the recent hikes. While the Fed is an American central bank, its decision will have an impact on the European indices.

The key economic news to watch will be the upcoming interest rate decision by the European Central Bank (ECB). Analysts expect that the bank will hike interest rates by 0.25% and point to at least two more increases since inflation remains sharply higher. The ECB has more room to hike interest rates since it was late in hiking. In a statement, an analyst at Societe Generale said:

“After the shock of what has happened, banks are going to be much more cautious today. My concern is that if the ECB keep squeezing the financial system too much it may lead to a credit crunch.”

DAX index, CAC 40 forecast

So, will the CAC 40 and DAX indices continue rallying in May. There is a likelihood that the two will continue rising as investors focus on central bank rate hikes capitulation. As such, the CAC 40 index will likely continue rising as buyers target the next key resistance at €7,800 while the DAX index will rise to about €16,500.

The main risk for the CAC 40 and the DAX index is the banking sector and the situation in the commercial real estate industry in the US. If the banking sector continues, there is a likelihood that the indices will pull back in May.

The post CAC 40, DAX index analysis ahead of Fed, ECB decisions appeared first on Invezz.

You May Also Like

Latest News

President Biden is asking Congress to approve nearly $100 billion in emergency funding to aid recovery efforts for the recent deadly storms that ravaged...

Stock

One hallmark of secular bull markets is rotation. When leading stocks, sectors, and industry groups falter, there needs to be others that grab the...

Latest News

Vice President Kamala Harris spent a whopping $1.5 billion during her 15-week campaign that ended in defeat to President-elect Donald Trump, including burning through...

Latest News

Activists on Saturday demanded that the state of California pay millions of dollars to each Black resident in reparations as a way to make...



Disclaimer: Frequencytraders.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


Copyright © 2024 Frequencytraders.com