Stock Indices Rise As Earnings Drive DAX, FTSE & DJI Higher

By Tammy Da Costa of DailyFX

Wednesday, August 3, 2022 3:00 PM EST

Earnings season has received mixed reactions as central banks ramp up quantitative tightening measures through aggressive rate hikes, reducing the purchasing power of consumers. With rising food and energy costs supporting persistently high inflation, gas shortages continue to threaten the Eurozone, providing a gloomy outlook for growth.

Although energy prices have decreased over recent weeks, Germany’s dependence on Russian gas and limited supply through Nord Stream 1 (currently at 20% of normal capacity) remain a key concern.

With the war in Ukraine approaching the six-month mark, the energy crisis has further been exacerbated by intense heat waves throughout Europe which have made hydroelectric and nuclear power more difficult to generate.

However, despite intensifying geopolitical risks, the Dax (Germany 40), FTSE (UK 100) and the Dow Jones Index (Wall Street 30) are currently trading higher on the day, supported by Q2 earnings.

DAX 40 PRICE ACTION

After temporarily falling to support, a bounce of 13,330 allowed bulls to drive price action higher, leading to the formation of a doji candle on the daily chart.

With prices rising above the key level of resistance we looked at yesterday (13,500), the Dax 40 has continued to climb towards the next big zone of resistance at 13,620 (the 23.6% Fibonacci of the 2011 – 2022 move). For the imminent move, support and resistance remains between 13,330 and 13,867 with a break of either side providing a potential catalyst for price action.

Dax 40 Daily Chart

(Click on image to enlarge)

Chart prepared by Tammy Da Costa using TradingView

FTSE 100 PRICE ACTION

Ahead of the BoE (Bank of England) interest rate decision, FTSE is trading higher, up around 0.86% for the day. With prices currently on the rise, a break of 7,494 could see a retest of 7500 with the next layer of resistance at 7,560.