Technical analysis for FTSE 100 for 10th July 2024
London's FTSE 100 suffered its steepest fall in nearly a month on Tuesday as banking stocks and energy titan BP pulled down the index, while investors seemed unfazed by Federal Reserve Chair Jerome Powell's testimony before the U.S. Congress.
The blue-chip FTSE 100 lost 0.7%, logging its third straight day of losses. The domestically-focused mid-cap FTSE 250 which rose after the Labour Party's election win last week, was down 0.7%.
Banking stocks were the biggest weight on the FTSE 100 as markets were spooked by comments from Bank of England policymaker Jonathan Haskel on Monday that stuck to his position of keeping interest rates on hold for now.
Investors moved past comments from the Federal Reserve's Jerome Powell in which he stated that a policy rate cut would not be appropriate until the Fed gains greater confidence that inflation headed towards the 2% target.
U.S. consumer price index figures and Britain's GDP are due later in the week and could influence the future trajectories of interest rate cuts in the economies.
US stocks closed at all-time highs for the 36th time this year after Federal Reserve Chair Jerome Powell’s remarks to Congress did little to alter bets that the central bank will be able to cut interest rates this year. Equities edged upward, defying concerns about an overstretched market. The S&P 500 rose for a sixth straight day — its longest winning streak since January. While Powell was careful not to offer a timeline for rate cuts, he emphasized mounting signs of a cooling job market after government data showed a third straight month of rising unemployment. Treasuries pared losses after a solid $58 billion sale of three-year notes, though a rout in European bonds kept a lid on the market. Swaps traders continued to project two rate cuts in 2024.
Asia & Overnight
Asian stocks hovered near two-year highs on Wednesday on growing bets of imminent U.S. rate cuts, while the New Zealand dollar slid after its central bank signalled greater confidence that inflation was coming to heel.
The Reserve Bank of New Zealand (RBNZ) held its cash rate steady at 5.5% on Wednesday as expected, but noted that inflation was expected to return to its target range of 1% to 3% in the second half of the year.
The Aussie, meanwhile, rallied more than 0.6% to touch an over one-year high against the New Zealand dollar , with the former underpinned by wagers that the next move in Australian rates might be up given inflation is proving stubborn.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.09% and remained close to the more than two-year high hit at the start of the week. Japan's Nikkei rose 0.13%, while Hong Kong's Hang Seng Index climbed about 1%. Chinese blue chips ticked 0.19% higher.
Stocks have rallied globally on the back of growing expectations of a Fed easing cycle likely to commence in September, with Powell saying on Tuesday that the U.S. is "no longer an overheated economy". However, Powell provided little clues on how soon those rate cuts could come.
Markets are now pricing in an over 70% chance of a Fed cut in September, compared to a near-even chance a month ago, according to the CME FedWatch tool. Still, the rise in U.S. rate cut expectations have done little to sway the dollar , which remained broadly on the front foot on Wednesday. That left sterling flat at $1.2787, while the euro was little changed at $1.0815.
Data on Wednesday showed China's consumer prices grew for a fifth month in June but missed expectations, while the producer price deflation persisted, as government support measures set a bumpy recovery in motion for the world's second-largest economy.
FTSE 100 technical analysis for today, 10th July 2024
The bears took control yesterday and managed to break below the 8150 level to test 8130 which becomes daily support for today to start with. A slight overshoot to test the S1 at 8119 and the key fib at 8109 may well play out, and also note that we have the lower daily support at 8080 as well with S2 and the bottom of the 10d Raff channel here. If we were to test that area then a long here is worth a go.
We have Powell again today with a speech rather than testimony, again at 15:00 so may well have a bit more of an official line regarding rates. The main thing for the UK will be tomorrow's GDP figures as well.
If the bears were to break below 8080 then 8029 is S3 - not expecting it to get that low though.
Resistance wise for today, then the daily pivot at the 8169 is first up though the bulls will be aiming for a push towards the round number at 8200 once again. However, we have the 30m 200ema at 8191 and then 2h resistance from the Hull a coral at 8200 and 8210 respectively - so the bulls will have a tough time trying to push too high today.
If they were able to break above the 8210 level, and bear in mind R1 is also 8209, then 8259 is R2 though that may well be a big ask today.
Despite the positivity in the USA, with US stocks closing at an all time high for the 36th time this year, the FTSE100 is being a lot more sedentary. Cable weighing a bit on it as well isn't helping the bulls. However, despite the strong close the 2h S&P500 chart has gone bearish and has Hull MA resistance at the 5595 area, so should we test that we may well see the bears have a go here. Initial support is at the 5572 level where we have the 2h coral and the first test of it since it's gone green. The range is therefore narrowing so we will likely see a breakout one way or the other soon. Seasonality suggests up.....
The FTSE100 daily Raff channels are still fairly flat as a result of the fairly small range recently, though with the bottom of both channels around the 8080 area then I would like to see any test of that hold today.
Not much more to say but good luck today.
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