European stocks closed sharply lower to start October, with all five major indices declining. Germany’s DAX held just above its key 200-day moving average, giving buyers a level to lean against. The UK FTSE 100, however, could not sustain its recovery above that same technical barometer and closed below it.
The closing levels showed:
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German DAX: 24,939.36, down 259.84 points or 1.03%.
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France’s CAC 40: 7,835.32, down 129.20 points or 1.62%.
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UK FTSE 100: 10,428.26, down 177.75 points or 1.68%.
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Spain’s IBEX 35: 19,005.30, down 420.90 points or 2.17%.
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Italy’s FTSE MIB: 50,237.86, down 1,134.11 points or 2.21%.
German DAX: Buyers lean against the 200-day moving average
The DAX fell to a session low of 24,831.60, just above its 200-day moving average at 24,828.76. Buyers stepped in against that level, helping the index recover some of its losses into the close.
That moving average remains a key support level going forward. Stay above, and buyers have a foundation for a recovery. Move below, and the technical picture becomes more bearish.
However, holding support is only the first step. The index remains below its 100-day moving average at 25,375.46, with the 100-hour moving average near 25,447 and 200-hour moving average near 25,576 providing additional resistance.
Buyers need to get—and stay—above those levels to put themselves back in control. Until then, the rebound remains a recovery within the recent move lower.
UK FTSE 100: Buyers had their shot. They could not hold it.
The FTSE 100 fell below its 200-day moving average at 10,451.85, bounced back above it, but could not sustain the recovery. By the close, the index had moved back below that key level, finishing at 10,428.26.
That leaves the bias in the sellers’ favor. The next downside target is 10,327.75, the 50% midpoint of the move higher from the March 2026 low.
For buyers, the first requirement is a sustained move back above 10,451.85. Staying below keeps sellers more in control and the midpoint target in play.
Markets at 12:30 PM ET: European yields diverge; U.S. Treasury yields fall
European 10-year yields were mixed. German and UK yields declined, while French and Italian yields rose, widening their yield spreads over Germany.
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Germany: 3.496%, down 8.6 basis points.
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France: 4.932%, up 7.1 basis points.
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UK: 5.393%, down 4.2 basis points.
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Spain: 4.149%, up 0.5 basis points.
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Italy: 4.691%, up 6.6 basis points.
U.S. stocks trade modestly lower
The major U.S. stock indices were slightly lower, while the Russell 2000 outperformed with a modest gain.
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Dow industrials: 50,843.07, down 68.02 points (-0.13%).
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S&P 500: 7,647.88, down 3.66 points (-0.05%).
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Nasdaq Composite: 26,823.65, down 37.41 points (-0.14%).
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Nasdaq 100: 30,372.10, down 36.42 points (-0.12%).
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Russell 2000: 2,804.20, up 7.33 points (+0.26%).
U.S. bonds rally, with shorter-term yields leading the decline
Treasury yields moved sharply lower, with the largest declines at the shorter end of the curve.
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2-year yield: 4.7914%, down 9.56 basis points.
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5-year yield: 5.0089%, down 8.01 basis points.
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10-year yield: 5.2343%, down 5.87 basis points.
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30-year yield: 5.5954%, down 4.36 basis points.
The larger drop in shorter-term yields steepened the Treasury curve. Despite the relief from lower yields, the major U.S. stock indices remained modestly in negative territory. The markets are pricing in a 30% chance of a Fed hike at the October meeting. That is down from 54% just 2 days ago.
This article was written by Greg Michalowski at investinglive.com.