FTSE MIB index analysis: Should you buy the Italian index now?

The FTSE MIB index is struggling even as the euro continues its downward trend and after the strong Italian industrial sales data. The pair index is trading at €26,528, which is about 2.50% below the highest level this week.

Italian stocks retreat

The FTSE MIB has declined by more than 0.30% today. Other European indices like the FTSE 100, IBEX 35, and CAC 40 have also retreated. The only European index doing well on Thursday is the German DAX. 

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The performance of the FTSE MIB mirrors what the Asian and American indices have performed. In Asia, the Hang Seng and Nikkei 225 indices have declined by more than 1%. Similarly, in the United States, futures tied to the Dow Jones and S&P 500 indices have also retreated.

Analysts attribute this performance to the hawkish statement that came from the Federal Reserve. In a statement on Wednesday, the Fed decided to leave interest rates unchanged. 

It also hinted that it will end its quantitative easing policy in March and then embark on a period of rate hikes. Most importantly, the bank did not rule out implementing more rate hikes in a bid to lower inflation.

Therefore, the FTSE MIB performance is mostly because of the Fed decision. Analysts believe that other central banks, especially the European Central Bank (ECB) will need to do the same thing later this year. A hawkish ECB tends to be weak for Italian stocks.

Meanwhile, the index declined even after the latest strong Italian industrial sales data. According to the statistics agency, industrial production rose by 22% in November. 

The best performers in the FTSE MIB were STMicroelectronics, Leonardo, Tenaris, Intesa Sanpaolo, Unipol Gruppo, and Stellantis. On the other hand, the main laggards in the index werre Prysmian, Interpump Group, Ferrari, Nexi, and Davide Campari-Milano,

FTSE MIB index analysis

The daily chart shows that the FTSE MIB index has dropped by more than 5.7% from its highest level this year. The index has even crossed the 25-day and 50-day moving averages. It remains slightly above the ascending trendline that is shown in green. The Relative Strength Index (RSI) has moved slightly above the oversold level.

Therefore, there is a likelihood that the index will resume the bullish trend as bulls target the key resistance at €27,000.

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