All change at no 10 | 8265 8308 resistance | 8247 8207 support | NFP Friday

All change at no 10 | 8265 8308 resistance | 8247 8207 support | NFP Friday

Technical analysis for FTSE 100 for 5th July 2024

London's FTSE 100 closed nearly 1% higher on Thursday, boosted by gains in medical equipment company Smith & Nephew, while parliamentary polls in the country were underway with the Labour Party looking set to win. Investors believe the market has already priced in the change.

The blue-chip FTSE 100 was up 0.9% and saw its best day in nearly two months. The mid-cap FTSE 250 edged 0.4% higher at 20,610.34. Both indexes logged gains for the second consecutive day.

The pound held firm on Friday after Keir Starmer's centre-left Labour Party was expected to win a huge majority in the UK general election, affording investors some much-needed certainty after years of market volatility under the Conservatives.

As of 0430 GMT on Friday, many results were still to be announced from Thursday's vote, but Labour had won more than 326 of the 650 seats in parliament, with an exit poll suggesting it would capture about 410, and Conservative Prime Minister Rishi Sunak had conceded defeat.

Futures on the FTSE 100 were 0.2% higher on Friday in Asia, as results from the UK election trickled in. UK stocks have hit record highs this year, buoyed by a slow-growing but comparatively stable economy and decelerating inflation.

Asia & Overnight
Asian share markets scaled new highs on Friday as investors sized up U.S. rate cuts for September and the mood was upbeat, while the euro hit a three-week peak ahead of French elections.

Sterling was firm at $1.2767 as Britain's Labour Party was set for a landslide poll victory that will sweep it to power after 14 years of Conservative rule.

Elsewhere, the dollar was slightly weaker and Treasury yields marginally higher in Tokyo, as trade resumed after the U.S. Independence Day holiday.

Japan's Nikkei and broader Topix both nudged up to record levels, as did Taiwan's benchmark. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2% to a two-year high with Samsung's estimate of a more than 15-fold rise in second-quarter profit helping South Korea's KOSPI  to a two-year peak as well.

Employment data in the U.S. headlines the economic calendar on Friday. A slowdown in hiring and small uptick in unemployment is forecast, which would leave open the door for U.S. rate cuts. A run of subdued data, with the U.S. ISM measure of services activity sliding to its lowest since mid-2020 earlier in the week, had markets lifting the probability of a rate cut in September to 73% and pricing 47 basis points of cuts this year.

In commodity trade, a weaker dollar has gold on course for its largest weekly rise in a month, up 1.4% to $2,357 an ounce. Oil is its most expensive since April with Brent crude futures holding above $87 a barrel following a bigger-than-expected drop in U.S. crude stocks, which suggest firm demand as the U.S. summer driving season gets under way.

FTSE 100 technical analysis for today, 5th July 2024

So in no surprise to anyone it was a Labour landslide as the political landscape in the UK changes again with a lurch to the left. Just as Europe in on the cusp of lurching to the right. The markets have been fairly unaffected so far with it all mostly priced in while the pound has remained firm as well as results have come in.

Initial resistance today is at the 8265 level and the bulls will be looking to break above this for a push up towards the 8310 are where we have the key fib and the R1 for resistance.

We have USA NFP today at 1330, with a forecasted drop to 190k. The unemployment rate expected to remain at 4% as well.

Above the 8318 R1 level (and we also have the top of the 20d Raff channel here) then the bulls will really want to put their foot down and pull away from the 8300 level, and would be targeting the 8360 area, where we have R2 and the next daily resistance level of note at 8367. Seems like it might be a big ask to get that high today though so keep an eye on 8265 and 8315 mostly.

Support wise then the 8200 area has quite a few supports of note, with S1, key fib, 200ema on the 30m, Hull MA on the 2hr all in this area. As such should we see a drop down to this area then it feels like it should bounce here. If it slides that low from the 8265 level then the bulls will certainly want to pump it back up.

We have a declining 10d Raff channel for today as well, with the top of that channel at the 8265 level, hence thinking that will be early resistance. It's 50/50 whether it just drops off there all morning or breaks through to test that higher resistance before dropping back.

End of the week and given there is likely to be a lot of news flow following the election over the weekend may well mean that we see some profit taking at the end of the day as well. Plus its NFP Friday so usually weird!

Good luck today and have a great weekend.

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