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The FTSE100 closed 3.1% lower at 7,044, and hot 7000 after hours but futuees have since risen well to regain 7100.
The Bank of England has been accused of “bottling” the interest rate decision as it revised its inflation forecast for the eighth time in a year. The Monetary Policy Committee voted to raise rates by just 25 basis points to 1.25pc, defying pressure to act more aggressively in the wake of the Federal Reserve’s biggest interest rate rise since 1994.
The cautious approach comes as the Bank tries to balance the risk of surging inflation – which has hit a 40-year high – with the risk of tipping the UK into a recession.
The MPC also revised its forecasts for peak inflation to above 11pc – up from 10pc previously. It’s the eighth time the Bank has been forced to change its predictions and means it will overshoot its 2pc target almost six-fold.
US equity futures stabilised Friday from a stock rout triggered by fears of an economic downturn, while the yen slid as the Bank of Japan stuck with super-easy monetary policy.
S&P 500 contracts rose 0.5%, signaling steadier sentiment compared with Thursday’s plunge in US shares to the lowest since late 2020. Asian stocks shed over 1% though Hong Kong bucked the trend with a smattering of gains.
Japan kept monetary easing and yield curve control, defying pressure to track a global trend toward tighter settings. The yen sank but Treasuries pared losses as the decision resolved some of the uncertainty gripping bond markets.
Japan’s 10-year bond yield retreated below the Bank of Japan’s cap of 0.25%, after earlier hitting 0.265%, the highest since 2016. Doubts about the sustainability of the central bank’s stance continue to linger.
The monetary authority did make a rare reference to currency risks, with the yen languishing around the weakest level versus the dollar in 24 years. The greenback bounced from its worst two-day drop since 2020.
Markets are rounding off a week buffeted by interest-rate increases, including the Federal Reserve’s biggest move since 1994, a shock Swiss National Bank hike that energized the franc and the latest boost in UK borrowing costs.
Rate hikes are draining liquidity, sparking losses in a range of assets. Global stocks face one of their worst weeks since pandemic-induced turmoil of 2020.
FTSE 100 live outlook prediction analysis for 17th June 2022
Another day of carnage yesterday during a tumultuous week, as the markets realise that the central banks don’t really have a clue either! We have climbed well since testing 7000 last night though, however there is initial resistance first thing at the 7100 level and 7115 with the daily pivot here so an initial drop off this down towards the 7050 level would make sense to start the day.
I would like to see 7050 hold today for a push up – bear market rally, dead cat bounce etc etc – preferably towards the 200ema at 7209. That may be a big ask for a Friday but as we know, Fridays can often be weird!
Below 7059 then 7000 is the next support of note, with S1 down at 6900 for today – quite a wide spread on the standard resistance and supports today due to the volatility – however we do have the bottom of the 20d Raff at 6974 prior to that, so keep an eye on this level.
For the bulls, if they can defend 7050 then a rise towards 7209 is certainly possible. Whether they could push much higher than that remains to be seen, especially ahead of a weekend. If they did then R1 is at 7234. A close above 7200 would bode well for a bit of a recovery next week though.
The 2h chart has once again gone bearish as you would expect with the 7095 level as resistance to start with, hence why I am thinking that we get a drop off this area.
The ball is in the bulls court to stage a comeback really.
S&P500
Again, a dip and rise would make sense today, but the bulls would need to defend the 3672 level where we have the key fib for today. Below that 3649 is the Hull MA on the 2h so the next level of note, then S1 at 3599 below that. But then its once again looking pretty bearish! A rise to 3740 could well play out today to test the upper fib level and the bulls will need to close above the 3714 daily pivot level to avert more selling next week.
Usual reminder to be cautious today as its Friday as they can often be a bit odd. Good luck today and have a great weekend.
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