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UK stocks closed lower as warnings about inflation from major central banks added to fears over the omicron variant.
The FTSE 100 ended the session 0.6pc underwater, while the domestically focussed FTSE 250 index shed 0.9pc.
Banks slipped amid uncertainty about whether the Bank of England will hike interest rates this month, after Governor Andrew Bailey said on Wednesday the economic impact from COVID-19 remained strong.
US indices have extended their gains as investors are buying the dip after the biggest back-to-back selloff since October 2020.
But many market-watchers are concerned this is a sign of heightened market volatility stirred by Federal Reserve Chair Jerome Powell’s hawkish tone and the spread of coronavirus.
The Dow Jones Industrial Average surged 1.9pc, the S&P added 1.5pc and the Nasdaq rose 0.8pc.
Most Asian stocks rose and U.S. Treasuries were steady Friday as traders awaited a key jobs report that could stoke expectations for a quicker reduction in Federal Reserve stimulus.
MSCI Inc.’s Asia-Pacific share index rose a third day, with Japan leading gains, while European equity futures rose and U.S. contracts fluctuated. Dip-buyers Thursday fueled the S&P 500’s best climb since October, a sign that some of the worst fears about the omicron virus strain are dissipating.
In Hong Kong, a gauge of Chinese tech firms slid. Investors were spooked by ride-hailing giant Didi Global Inc.’s plan to delist from the U.S. under pressure from Beijing, and growing scrutiny of Chinese firms traded in America.
Treasury yields held most of a jump from the U.S. session, where Fed officials laid out the case for a faster removal of policy support amid high inflation. The dollar was little changed. Crude advanced after OPEC+ proceeded with an output hike but left room for quick adjustments due to a cloudy outlook.
FTSE 100 live outlook prediction analysis for 3rd December 2021
We have a bit of a recovery underway as the “buy the dip” continues to be the best play. The FTSE has held on above the 7000 level well and looks like it will try to pop up towards the 7220 daily resistance level next. The proviso is that the bulls defend any initial drop this morning, preferably only as low as the 7130 support area, though there is scope for it to drop down to the 7070 level again where we have the 2h coral line, a key fib, and also S1.
Initially it would be good for any drop to hold the 7130 area where we have the 30m support and 200ema as that could act as a springboard for a push higher again. The ASX200 had a dip and rise play out today (been the pattern all week across the board really) and we may well do the same. The Omicron fears are waning a bit as whilst more transmissible it seems mild. Fingers crossed.
The key resistance is 7183 as that level has been the ceiling this week and to start with we also have R1 and the key fib resistance here. Ergo a drop down from here (its at 7178 as I write this) to test the support levels would make sense. The bulls are going to need a concerted push to get it up through 7183 today. Still its Friday and anything can happen on a Friday!
So, 7130 and 7070 are the key FTSE100 levels to look for support today. For resistance 7183 and 7220 above that. This higher level is also the first test of the 25ema daily resistance, and could well see the bears reappear here. One more leg down before a bit of Santa Rally action nearer to the 25th maybe?
The Dax is also on key resistance at 15400 as I write, so again a dip and rise would play out well. 15150 is decent 2h support if it got that low, while 15284 is the daily pivot and the first level of support if we slide first thing.
The S&P tested the 2h support overnight at 4549 and we could see a second test in hours. The Bulls really need to break above the 4610 level to end the week on a positive, but there is also resistance at the 4593 level – a key fib and 200ema here on the 30m. We may well see an initial struggle to push past this. The 30m coral support is at the 4555 levels long with the daily pivot so watch this for support, but below we have 4531.
As its Friday it can pay to be a little bit more cautious also – lower stakes and so on.
Good luck today and have a great weekend.
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