Technical analysis for FTSE 100 for 18th March 2024
A 13% slide in Reckitt Benckiser shares dragged the UK's blue-chip index lower on Friday, after one of its units was fined in a lawsuit related to its baby formula. Reckitt's stock recorded its biggest percentage drop in more than two decades after an Illinois jury ordered its unit Mead Johnson to pay $60 million to the mother of a premature baby who died of an intestinal disease after being fed Enfamil.
The FTSE 100 index of top British firms dipped 0.2%, in an otherwise uneventful session.
The UK's domestically oriented FTSE 250 edged up 0.1% on Friday but recorded modest weekly losses.
UK markets tracked a dour mood globally after hotter-than-expected U.S. inflation readings this week dampened expectations of an early rate cut from the U.S. Federal Reserve, potentially setting the tone for other central banks.
The British public's expectations for the pace of inflation over the coming year have fallen over the last three months, a Bank of England (BoE) survey showed, which may reassure policymakers who are considering when to cut interest rates.
The BoE is expected to keep rates on hold at 5.25% next Thursday, with market pricing favouring the BoE cutting rates slightly slower than the European Central Bank and Fed this year.
Despite its dip on Friday, the FTSE 100 ended the week higher, snapping three straight weeks of losses as domestic data showed slowing wage growth and the economy returning to growth in early 2024.
Asia
Asian shares firmed on Monday as Chinese data surprised on the upside for once, while investors looked to navigate a minefield of central bank meetings this week that could see the end of free money in Japan and a slower glide path for U.S. rate cuts.
Beijing reported industrial output climbed an annual 7% over January and February, while retail sales rose 5.5% on a year earlier. But real estate remained a worry as property investment fell 9% on the year, underlining the case for further policy support.
Central banks in the United States, Japan, UK, Switzerland, Norway, Australia, Indonesia, Taiwan, Turkey, Brazil and Mexico all meet this week and, while many are expected to hold steady, there is plenty of scope for surprises.
Tuesday could see the end of an era as the Bank of Japan is widely tipped to end eight years of negative interest rates and cease or amend its yield curve control policy.
FTSE 100 technical analysis for today, 18th March 2024
Friday saw the rise and dip play out, and we may well be on for a bull Monday if the bulls can be quick out the blocks. We are just sat on a cluster of supports to start with, as we have the daily pivot, 30m 200ema, 30m coral all at the 7740 level. If we can spring off this then a rise towards the 7786 R2 level should play out this morning, and ultimately the bulls will be aiming for the 7800 round number again.
Slightly higher up and in play also as resistance is the 7809 R3 level and also the top of the 20d Raff channel here. If we see this then a drop from here would also make sense.
The US futures have kicked up to start the week as well and apart from the S&P500 leaving a gap at 5119 also looks set for a rise towards the 5155 resistance level to start with. If it does get there and the bears appear they will be aiming to close that gap.
For the FTSE100 support then below the 7740 to start with we would be looking at the 7719 level once again which has been a key battleground recently. We also have S1 at 7714 so should we get a drop down to this level then we may well see another bounce here.
Below that then the 7684 level is the next key support and I would expect this to hold if seen. Might not get that low today as hopefully the 7714 level holds, but bear it in mind.
We have a big week on the news front with lots of central bank and interest rates. BoE will hold steady on Thursday I expect. Likewise, the Fed aren't likely to adjust rates this week.
Good luck today.
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