Technical analysis for FTSE 100 for 8th October 2024
The FTSE 100 index rose on Monday, boosted by gains in energy shares and a softer labour market report, though losses in precious metal miners kept gains in check. The blue-chip FTSE 100 rose 0.3%, while the mid-cap FTSE 250 edged 0.2% lower.
Oil and gas shares led sectoral gains, with a 2% advance as oil prices extended a rally driven by fears of a wider Middle East conflict and potential disruption to exports from the major oil-producing region.
Shell was up 2.3% despite reporting a nearly 30% drop in its refining profit margins in the third quarter as global demand sagged, while oil product trading earnings also weakened.
Precious metal miners tumbled 3.7%, logging their worst day in more than a month as bets firmed for a smaller U.S. rate cut in November after strong jobs data.
Britain's jobs market showed more signs of cooling in September as pay growth increased at the slowest pace in almost four years, likely reassuring the Bank of England as it considers whether to cut borrowing costs again.
Additionally, British house prices rose in September at the fastest annual pace since November 2022, as expectations of further reductions in borrowing costs added to momentum in the property sector.
In other news, BP abandoned a target to cut oil and gas output by 2030 as CEO Murray Auchincloss scales back the firm's energy transition strategy to regain investor confidence. The index heavyweight closed the session with a 1.3% rise.
Asia & Overnight
Chinese shares soared to two-year highs in frenzied trade on Tuesday, extending a blistering rally as mainland markets reopened after a week-long break, while Hong Kong shares slid as investors walked back some of the stimulus excitement.
Mainland shares had added $600 billion in market value by mid-morning and turnover surged past a trillion yuan ($142 billion) inside 20 minutes of trading. Industrial metals leapt on bets that the recent burst of stimulus measures will steady a shaky economy while semi-conductor and construction shares rallied as expected beneficiaries of government spending.
In stark contrast to the mainland, shares in Hong Kong showed a sea of red, with the Hang Seng Index tumbling more than 10% at one point.
Analysts initially attributed the divergence to Chinese stocks playing catch-up, since Hong Kong had surged while the mainland was on holiday, but it was soon clear that the markets were disappointed over the lack of stimulus specifics from Beijing.
That's set up a negative opening for Europe, with stock futures falling in Asia hours.
EUROSTOXX 50 futures slid 0.8%, while FTSE futures retreated 0.5%.
The economic calendar is relatively light for the day, leaving the focus squarely on China, although fears of an escalating conflict in the Middle East and a repricing of Federal Reserve expectations will also remain front of mind for investors.
Oil prices retreated on Tuesday - in part reflecting events in China, although it was also due to a slight step back from a strong rally at the start of the week on developments in the Middle East. Hezbollah fired rockets at Haifa, and Israel looked poised to expand its offensive into Lebanon.
As for the Fed, the market's short-lived conviction that it would stick to a dovish path evaporated after Friday's blockbuster payrolls report. Market pricing now points to just another 50 basis points of rate cuts by December.
FTSE 100 technical analysis for today, 8th October 2024
We got the dip rise dip yesterday but the bears were a bit stronger and took it as low as 8260 before it climbed back. In a continuation of the bearishness we may well see a drop down to the 8220 level today if a bit of a bear Tuesday plays out. That level looks fairly key if the 8250 support one breaks, as we have the S2 here, along with daily support. It is also just below the rising 10d Raff channel bottom.
Initially a rise to test the 8290 resistance area would fit well, as we have the daily pivot, and the red 30m coral here. We have tested that already overnight and dropped off so an in hours test should see a repeat.
The bulls will need to be quick on the defence this morning though if we are to see a test of the 8290 level though it does look like a bear Tuesday is on the cards. We are still light on major news till later in the week so a bit more range bound is likely, and today that 8220 to 8290 range would fit well.
Below 8220 and the bears will be looking to really capitalise as the next key daily support is 8120, though we have 8180 for S3 and the bottom of the 20d Raff channel. A long here at 8180 is probably worth a go with a tight stop if seen.
For the bulls, if they were to break above the 8300 level then the 8330 is still the line in the sand, and then 8367 above that. I don't expect us to get that high today though!
Not really much more to say in the absence of any significant news - keep an eye on the levels and good luck today.
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