DAX, FTSE Forecast: Two trades to watch

DAX rises on upbeat risk sentiment – German data could limit gains

• Chinese stimulus & Fed rate cut lifts sentiment
• German IFO Business Climate Data could raise recession worries
• US consumer confidence is due later
• DAX looks to test ATH

The DAX is rising towards record highs following games in Asia after China announced large-scale stimulus measures to support the slowing economy.

The developments also come as the market remains buoyant following the Federal Reserve's rate cut last week, which increased liquidity in the system and boosted risk sentiment.

These international factors or overshadowing concerns domestic concerns may be underscored by German Ifo business confidence today.

Data is expected to show that the business climate index fell to 86 in September, down from 86.6 in August. A weaker-than-expected business climate could add to recession concerns.

Yesterday, German PMI data showed that the business activity in the German economy contracted further, raising alarm bells for the country and sparking recession fears.

Weaker than expected German business climate could limit gains in the DAX.

Looking ahead to the US session, attention will be on U.S. consumer confidence which is expected to increase to 103.8 in September, up from 103.3 in August. Stronger consumer confidence often goes hand in hand with an increase in private consumption, which supports GDP growth. An upbeat consumer confidence reading could boost risk management, lifting equities higher.

DAX forecast – technical analysis

DAX trades above its rising trendline as it extends its recovery from the September low of 18200. Buyers are looking to test 19049 to rise to fresh record highs. Above here, there are blue skies, so the next logical level would be 19500.

Support can be seen at 18700, the weekly low, and the rising trendline. Below here, 18,200 comes into focus, with a break below creating a lower low.

FTSE rises after Chinese stimulus boosts heavyweight miners

• China unveils a range of stimulus measures
• Miners jump tracking metal prices higher
• FTSE rises above the 50 SMA but remains range-bound

The FTSE 100 is pushing higher, boosted by the news that China is unleashing a vast stimulus package to revive its flagging economy.

China’s central bank unveiled a broad package of monetary stimulus measures to boost the world's second-largest economy amid rising concern over slowing growth and depressed investor confidence in the country.

The PBOC cut key short-term interest rates and announced plans to reduce the bank’s reserves to the lowest level since 2018. This was the first time that a reduction in both measures was revealed on the same day in almost a decade.

Other announcements followed these moves, including a package to shore up the nation's troubled property sector.

Miners have surged on the news of the Chinese stimulus measures. The prospect of stronger growth in China, the world’s largest consumer of metals, has boosted metal prices. The likes of Anglo-American and Antofagasta are topping the Footsie leaderboard as they track metal prices higher.

FTSE 100 forecast - technical analysis

The FTSE continues to trade within a holding pattern dating back to mid-May, capped on the upside by 8400 and by 8150 on the lower band. The price has recovered above the 50 SMA at 8250. Buyers will look to extend gains toward 8400 before bringing 8480 and fresh all-time highs.

Sellers will need to break below 8250 to bring the 8150 level into play. A break below here exposes the 8000 round number.