Technical analysis for FTSE 100 for 7th March 2024
UK shares closed higher on Wednesday, with the domestically-focussed FTSE midcap index at a two-month peak, as the government bet on tax cuts to revive its election chances, while Premier Foods surged to a nearly 13-year high.
The blue-chip FTSE 100 ended up 0.4%, while the mid-cap FTSE 250 rose 1.1% to its highest level since early January.
Finance Minister Jeremy Hunt's pre-election budget revealed tax cuts, an annual economic growth forecast of 0.8%, and he added that the Bank of England's 2% inflation target would be achieved in a few months.
Adding to the cheer, the investment banking and brokerage services sector advanced 0.8% as Hunt also outlined plans to reform tax-free savings accounts to boost investments into London-listed firms.
While stock indexes across the Group of Seven advanced economies have climbed so far this year, Britain's indexes have declined amid worries about an economic slowdown and uncertainty over the timing of interest rate cuts.
ASIA
Asian stocks were mostly up on Thursday as investors took comfort from growing signs the Federal Reserve will soon embark on rate cuts, while chatter of an imminent policy shift in Japan lifted the yen and pulled the Nikkei off its all-time highs.
Markets were also generally cautious ahead of the European Central Bank meeting later in the day. Both the EUROSTOXX 50 futures and FTSE futures were flat, while Nasdaq futures fell 0.4% and S&P futures slipped 0.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5%. helped by a 1.4% jump in Taiwan's share market to record highs.
Japan's Nikkei slid 1.4%, after hitting a fresh all-time high earlier in the session, and the yen strengthened 0.5% to 148.61 per dollar, the highest in a month, as momentum builds that a move from the Bank of Japan to end negative interest rates could come as soon as this month.
Fed
Overnight, Wall Street closed higher after Federal Reserve Chair Jerome Powell stuck to the script by saying the Fed still expects to cut rates later this year, even though continued progress on inflation "is not assured". That kept bets of a rate cut in June alive at an 84% probability. Longer-term bond yields slipped, dollar fell, gold prices hit a record high and oil jumped.
ECB
For now, investors are looking ahead to the policy action in Europe. The European Central Bank is set to keep interest rates steady at a record 4.0%, but any messaging from policymakers that support a rate cut in June would be a relief to markets. Futures are almost fully priced in for a first rate cut from the ECB in June, with a total easing of 88 basis points expected for all of this year.
FTSE 100 technical analysis for today, 7th March 2024
Today looks like a dip and rise may well play out and we have the ECB rate decision at 1315 - expected to stay at 4.5%. The press conference at 1345 may well give clues on what they are thinking, while we have the Fed's Powell testimony at 1500. Again, traders will be looking for rate cut guidance.
So assuming we get the dip and rise, initial resistance is at the daily pivot at the 7662 level and a drop down to the 7596 S2 level, and also the recent low may well play out.
7647 is however the green 2h coral so this will be the level that the bears will need to break initially. S1 is at 7621 and 7614 for the key fib, but the bears will be cheered by the drop off 7700 yesterday and the failure for the large divi to push it up towards the 7720 area.
Below 7600 then we still have 7575 to keep an eye on.
Resistance wise, above the 7662 daily pivot then 7703 yesterdays high is now also the top of the 10d Raff channel and may well see a stutter there, while higher up we still have the 7715 level untested. Should it manage that today then again a short here is worth a go.
The Dax40 and S&P500 look like they will also follow a similar pattern with a dip and rise may well playing out. Looking at 17600 and 5050 as the main supports respectively on those 2.
Good luck today.
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