Technical analysis for FTSE 100 for 22nd March 2024
UK stocks closed higher on Thursday, with the FTSE 100 rising as much as 2%, boosted by rate-sensitive financials after the Bank of England kept borrowing costs unchanged and said that the economy is moving in the direction for interest rate cuts.
The FTSE 100 closed at its highest level since May 2023, boosted by a 4.5% gain in the investment banking sector, while a near 1.0% fall in the pound against the dollar also helped the exporter-heavy index.
The top index also outperformed the pan-European STOXX 600 that closed up by 0.9%.
Investor euphoria gained steam after the BoE held rates at 5.25% and said it expected inflation to drop below its 2% target in the second quarter. Traders see 75 basis points of rate cuts this year, up from around 70 bps prior to the decision.
With Thursday's gains, the main FTSE indexes are in gains year-to-date, but lagging developed market peers, given limited exposure to technology-related companies that have led much of the global frenzy around Artificial Intelligence.
UK
Andrew Bailey has said interest rate cuts are “on the way” even as the Bank of England held borrowing costs at a 16-year high for the fifth meeting in a row. The Governor sparked a stock market rally after delivering his strongest signal yet that policymakers were on course to reduce rates this summer, adding it was “reasonable” to expect two or three cuts this year.
While Bank officials voted to keep borrowing costs unchanged at 5.25pc on Thursday, Mr Bailey’s comments prompted traders to ramp up their bets on rate cuts this year.
Britain’s FTSE 100 enjoyed its best day this year, closing up 1.9pc at 7,882, while benchmark borrowing costs edged down and the pound slipped by more than a cent against the dollar to $1.265.
Asia
Chinese stocks slumped on Friday and the yuan fell, dragging down markets broadly in Asia and rupturing an equity market rally spurred by a surprise rate cut in Switzerland that had investors wagering on who will ease policy next. Traders were left on high alert in Asia with a yen creeping back toward multi-decade lows and jawboning efforts from Japanese government officials ramping up, alongside sliding Chinese stocks triggered by a sudden fall in the currency.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3%, weighed down by the slump in Chinese equities, and looked set to end the week little changed. The index remains nearly 1.5% higher for the month, riding a rally from its global counterparts on the prospect that global interest rates were likely to be lower by the year-end
FTSE 100 technical analysis for today, 22nd March 2024
Well 7800 got defended... and we even managed 7902 which is now the line in the sand that the bulls will need to break. 8000 remains in view as well, and I am still expecting 8300 this year. Initially today above the 7902 level then the 7936 R1 is also the next daily resistance level of note so we may well see any bullishness stall in this area ahead of the weekend.
Splitting these two is also the key fib at 7913 and should we see an early climb at the bell I am tempted to short here as well. With 7913 and 7936 being pretty close you could always go short at both these and fade in and then see if we get the run down towards the 7855 support.
Above 7936 then 7986 is next up and would likely be seen if the bulls go for it today. Interestingly Asia was a bit weaker on Friday and the ASX200 had a dip and rise play out - I am thinking that we may well see something similar and then some profit taking at the end of the day ahead of the weekend.
Support wise today the daily pivot area at 7851 Is the main one and then we have 7833 as daily support. The bulls will be trying to keep the momentum going from yesterday and aim for a decent end to the week so we may well see any drop get bought back up.
Below that then 7800 is the next one - 30m 200ema, key fib and S1 are all here so should it get that low then the potential exists for a decent bounce. Along with a defence of the round number.
The S&P500 and Dax40 also both look like they have the potential for a dip and rise today. I am looking at a support level of 5236 and 18080 respectively on these.
Good luck today and have a great weekend.
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