DE30 drops to a 1-month low❗

🔽European and US equities take a hit today on hawkish market bets

Moods on the global equity market are sour today. Blue chips indices from Western Europe trade around 2% lower at press time while Wall Street indices trade 1.2-2.2% lower. Downward move on the stock markets is driven by rising hawkish bets. Expectations began to change after FOMC minutes released yesterday hinted that some Fed members saw it as appropriate to increase interest rates at the June meeting. Moreover, a streak of positive US data releases today further supported rate hike odds. Blockbuster ADP report showed an almost half a million employment increase for June while Challenger report showed lay-offs at 7-month low. On top of that, services ISM jump from 50.3 to 53.9 in June, driven by rebound in employment and new orders indices. Money markets now price in an almost 90% chance of 25 basis point rate hike at FOMC meeting in July and almost 50% chance of 50 basis points of cumulative tightening by the November meeting.

Taking a look at German DAX futures chart (DE30) at D1 interval, we can see that the index is slumping today. DE30 is currently testing late-May 2023 lows that can be found near 15,650 pts mark. A point to note is that the index broke below 15,850 pts support zone earlier today. This is important from a technical point of view as this support marked the neckline of a head and shoulders pattern. A break below paves the way for a deeper decline with textbook range of the downside breakout from the pattern pointing to 15,125 pts area.

Source: xStation5