Technical analysis for FTSE 100 for 23rd August 2024
The UK's benchmark FTSE 100 ended little changed on Thursday, as lower metal prices weighed on sectoral heavyweights, while investors assessed softer U.S. business activity data ahead of the Jackson Hole economic symposium.
The blue chip FTSE 100 was up 0.1%, while the mid-cap FTSE 250 index was down 0.4%.
On the data front, British business activity sped up this month and cost pressures were the weakest in over three years, signalling growth momentum going into the second half of 2024.
U.S. business activity fell to a 4-month low in August, bolstering the likelihood that inflation will stay on a downward trend over the coming months.
Focus now shifts to the eagerly anticipated Jackson Hole economic symposium, with Fed Chair Jerome Powell set to speak on Friday.
The policymaker is expected to acknowledge the case for a September rate cut amid dovish comments from other central bank officials and recent data adding to the narrative of cooling inflation in the United States.
Asia & Overnight
Asian shares stuttered on Friday while the dollar rebounded from one-year lows as investors were cautious ahead of a speech by the world's most powerful central banker with markets looking for confirmation U.S. rate cuts would start in September.
The Japanese yen gained 0.3% to 145.77 per dollar while bond yields edged up as Bank of Japan Kazuo Ueda spoke before lawmakers.
Traders see very little chance that the BOJ could hike rates in October after the recent sell-off, but Ueda stuck to the script by saying the central bank stood ready to raise rates if the economy and prices move in line with its forecast.
Data out early in the day showed Japan's core inflation accelerated for a third straight month, but a slowdown in demand-drive price gains suggest no urgency for any immediate rate hikes.
On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4% but were headed for a weekly gain of 0.6%. The Nikkei was flat near three-week highs.
China's blue chips gained 0.3%, although Hong Kong's Hang Seng fell 0.4% while South Korea dropped 0.5%.
Overnight, Wall Street fell as sentiment turned cautious ahead of the Federal Reserve Chair Jerome Powell's speech in Jackson Hole. Three Fed speakers on Thursday alluded to a rate cut in September, with them voicing support for a "slow and methodical" approach.
Taken together with surveys showing the U.S. economy still growing at a healthy pace, markets slightly pared back the chance of an outsized half-point cut in September to 24%, from 38% a day earlier. A quarter-point reduction is fully priced in.
FTSE 100 technical analysis for today, 23rd August 2024
Jackson Hole concludes today, with the speech from Powell later at 1500. More than likely to infer rate cuts in September as is generally expected and has helped to underpin the bounce since the recent lows.
For today the FTSE100 will be looking to defend the 8290 daily pivot level and a push up towards the 8372 area ultimately may well be on the cards. We have a few key resistance levels here for today, along with it being the recent topping out level.
The bulls will therefore have a bit of a job to break above this, especially as its a Friday ahead of an extended weekend (bank holiday in the UK on Monday) and we may well see some profit taking at this level should it be tested.
Prior to 8372 though and the 8317 R1 level is the first hurdle to jump and has been capping things recently. However with the bullish momentum and the continued effort from the bulls to stay above the 8300 level we should see a push through this today. Can it then test 8350 key fib and R2 area....
Support wise the daily pivot 8290 as mentioned is the key to start with, and we have the 30m 200ema and the green 30m coral here, so I would expect this to hold. The 2h chart has also gone bullish after yesterdays session and has Hull MA support at 8281. As such, it remains buy the dip, along with buy the rumour, sell the news ahead of the US Powell speech later on.
The daily chart remains bullish also, and the 20d Raff channel is now levelling off to join in with the bullish 10d channel. The daily EMA support is at 8247 as well and having pretty much tested this line on the 20th, we have risen well off it.
The S&P500 meanwhile needs to break above the 5635 level where that has 2h resistance and I am expecting a rise to to test that level today.
Generally then it looks bullish still! Good luck today and enjoy the long weekend.
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