Technical analysis for FTSE 100 for 24th May 2024
The UK's main stock indexes closed lower for a third consecutive session on Thursday amid political uncertainty ahead of UK's elections in July, while news of slower growth across businesses in May weighed on sentiment.
The blue-chip FTSE 100 index and mid-cap FTSE 250 each tumbled 0.4%. A surprise call for a general election by Prime Minister Rishi Sunak spooked investors as they weighed the potential scenarios.
An upbeat quarterly earnings report from American chipmaker Nvidia boosted technology shares across global markets, lifting the U.S. benchmark S&P 500 and tech-heavy Nasdaq hit record highs.
A survey showed growth across British businesses had cooled more than any economist had predicted.
U.S. stocks ended sharply lower on Thursday as enthusiasm over Nvidia's quarterly results faded and robust economic data fueled concerns over tighter-for-longer monetary policy. U.S. Treasury yields turned higher after the data.
All three major U.S. stock indexes gathered downward momentum in afternoon trading, ending the session deep in red territory. The blue-chip Dow suffered the worst of it, closing down 1.5%.
Asia & Overnight
Asian stocks fell on Friday as strong U.S. economic data bolstered the prospect of interest rates staying higher for longer and the Federal Reserve taking its time in cutting rates, keeping investors away from risky assets.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1% and was on course for a 1.5% weekly decline, snapping its four-week winning streak. Japan's Nikkei fell 1%.
The risk-averse mood is set to continue in Europe, with the Eurostoxx 50 futures down 0.44% and FTSE futures 0.75% lower.
Data on Thursday showed U.S. jobless claims dropped while S&P Global's Flash PMI survey showed business activity expanded faster than economists forecast in May.
The robust economic data along with hawkish minutes from the Fed's last meeting earlier in the week has led traders to dial back their bets on rate cuts this year.
Markets are now pricing in just 35 basis points of easing in 2024, versus expectations of 150 bps of cuts at the start of the year, with a rate cut fully priced-in only in December. Atlanta Fed President Raphael Bostic said the U.S. central bank may need to wait longer to cut interest rates because even with April's slightly cooler inflation reading there is continued upward pressure on prices.
The start of the election campaigns of British Prime Minister Rishi Sunak and his Labour Party rival Keir Starmer, drew eyes on Thursday though analysts said the poll was unlikely to have a major effect on markets.
In commodities, oil prices were steady, with Brent crude at $81.38 a barrel. U.S. West Texas Intermediate crude (WTI) futures were at $76.86.
FTSE 100 technical analysis for today, 24th May 2024
Well the mid/end May seasonality sell off has kicked in, after the NASDAQ had made its record high yesterday. That has dragged everything down and the FTSE100 being below 8300 means that the 8200 next round number is in play again. We are just testing the bottom of the 20d Raff channel at 8250 to start with so may well see an initial recovery this morning, to get a rise towards the 8320 daily pivot area.
8250 is the overnight low, S1 and also the key fib here to start with so the bulls will need to be quick out the blocks to pull away from this first thing. After the 8320 level then 8370 is the next area of note, though that might be a big ask for a Friday session, before an extended weekend (bank holiday on Monday, so no email that day).
That said, if the bulls do play ball today its not totally out of the question and as we are at the bottom of the various Raff channels there is certainly an opportunity for some buying today.
Below the 8250 then 8209 is S2 and just above the round number, so should we get that low then a bounce here may well play out.
On the news front today, at 1330 we have US durable goods with a forecasted drop to 0.8%, then Michigan consumer sentiment at 15:00, again, a forecasted drop to 67.5. If they both come in as forecasted then we could see the bears capitalise at these times.
Not too much more to say really, keep an eye on the key levels and have a great weekend.
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