European equities hold onto gains to end the weekly higher, FTSE knocks £7,700

• Europe sees green as stocks celebrate the end of ECB rate hikes.
• European rate hike cycle appears at the peak as central bank focuses on how long rather than how much for current rates.
• Consumer data beats from China supporting risk appetite to finish the week.

European equity indexes enter the weekend broadly in the green after a good week on the charts. London’s FTSE 100 index caught a late-week rally to end the trading week into the £7,700 region. Developers and home builders were the big bidders for the United Kingdom’s (UK) major index as investors bet that the housing market slowdown could face its end.

Investor sentiment caught some support from China figures this week that saw retail sales and industrial production figures broadly beat expectations, easing concerns of a global slowdown sparked by a declining Chinese economy.

EU equities chalk in gains for the week on the end of ECB rate hikes

Germany’s DAX closed the week in the green but has struggled to regain the €16,000 level, closing out Friday near €15,870. The German index is up over 0.5% for Friday, and gained a little over 2% from the week’s lows.

France’s CAC 40 was the big winner of the major European indexes on Friday, bouncing upwards just shy of 1% and gaining 1.6% for the trading week.

The UK’s FTSE 100 ended Friday up 0.5%, capping off a 3.15% rebound from the week’s bottom and the equity index tested into sixteen-week highs on Friday.

Headwinds still remain in the future, but recent risk appetite pangs have eased for the time being and investors are pushing higher-yielding assets higher. The pan-European EuroStoxx 50 blue chip index ended the week 1.15% higher at €4,327 but has yet to re-challenge 2023’s highs above €4,450.

Investors are increasingly hopeful for an end to the tightening cycle in monetary policy, bolstered by a dovish showing from the European Central Bank (ECB) this week. 

ECB President Christine Lagarde delivered what is set to be the ECB’s last rate hike for the foreseeable future, talking down the potential for future rate hikes, and declaring the ECB’s pivot to focusing on rate duration rather than adjustment. President Lagarde also reiterated that while economic growth is expected to be constrained looking forward, the ECB doesn’t see contraction, and stubbornly sticky inflation isn’t expected to increase from this point.

FTSE 100 technical outlook

The UK major index is knocking into the high side on daily candlesticks, but profit-taking could see the FTSE slipping back to the 100-day Simple Moving Average (SMA) just below £7,650.

A pattern of higher highs could be developing, and a rising near-term trendline from August’s lows near £7,250 could provide dynamic support if an extended move lower begins to develop.

Bidders will note the Relative Strength Index (RSI) is moving into overbought territory, and another leg higher might need to wait for a pullback and the 34-day Exponential Moving Average (EMA) to gather further steam from the £7,500 handle.

FTSE 100 daily chart

FTSE 100 technical levels