Technical analysis for FTSE 100 for 7th October 2024
London-listed stocks were little changed at the close on Friday, paring some earlier declines after a strong U.S. jobs report, but ending the week in the red as investors eyed rising conflict in the Middle East.
The blue-chip FTSE 100 was flat, while the mid-cap FTSE 250 jumped 0.8% higher. Both indexes, however, notched weekly declines.
The blue-chip FTSE 100 dipped 0.5% for the week, while the midcap index lost 1.6%.
Stocks pared some losses after a closely watched U.S. labor market report showed the world's largest economy added far more jobs than expected in September, quelling some concerns about the outlook for global growth and demand.
Heavyweight oil and gas shares advanced 0.9%, and jumped over 5.5% for the week, the sector's best trading week since April as crude prices rose after President Joe Biden said the United States was discussing an Israeli attack on Iranian oil facilities.
Escalating conflict in the Middle East has raised worries about disrupting supply, lifting commodity-linked stocks. The oil and gas sector was the best sector performer this week.
The FTSE 350 Bank index rose nearly 2% as investors trimmed expectations for Federal Reserve policy easing, and as Bank of England Chief Economist Huw Pill said the BoE should move only gradually with cutting interest rates.
Day ahead
From worries about a U.S. economic "hard landing", the debate has shifted to the potential for a so-called "no landing", where the labour market continues to burn hot even as inflation cools.
The story is so compelling that it completely absorbed the attention of traders and investors, even as Israeli bombs fell in Gaza and Lebanon, with Monday marking one year since the Hammas attack that triggered war.
Asian stocks picked up where Wall Street had left off, and Japan's Nikkei led the charge with a 2% surge, getting extra help from a sharply weaker yen.
The U.S. exceptionalism narrative, which had been on shaky footing last month, is standing tall - and king dollar is straddling its shoulders.
The yen, euro and sterling all fell, although the return of Japanese finance ministry jawboning helped to put a floor under the yen. Traders' scars from Japan's last round of currency intervention may have started to twinge when top currency diplomat Atsushi Mimura said he was watching speculative moves "with a sense of urgency".
Asia & Overnight
Asian stocks rallied and the dollar reached a fresh seven-week peak on the yen on Monday after blowout U.S. labour data dispelled fears of a recession and spurred a sharp paring of rate-cut bets.
Short-term U.S. Treasury yields rose after the closely watched non-farm payrolls report on Friday showed the economy unexpectedly added the most jobs in six months in September.
Crude oil prices eased from a one-month peak even as Israel bombed targets in Lebanon and the Gaza Strip, with Monday marking one year since the Hamas attack that triggered the war.
Japan's Nikkei led regional equity gains with a 2% rally as of 0015 GMT, given additional momentum by the softer yen.
Australia's stock benchmark added 0.12% and South Korea's Kospi gained 0.29%.
Hong Kong's Hang Seng had yet to open, and mainland Chinese stocks remain closed until Tuesday for the Golden Week holiday. MSCI's broadest index of Asia-Pacific shares climbed 0.4%.
U.S. Dow futures pointed 0.08% higher after the cash index closed at an all-time peak after the payrolls data on Friday. Crude prices slipped following their biggest weekly gains in more than a year amid the mounting threat of a region-wide war in the Middle East. Brent crude futures lost 65 cents to $77.40 per barrel, while U.S. West Texas Intermediate crude futures declined 53 cents to $73.85 per barrel.
FTSE 100 technical analysis for today, 7th October 2024
A decent fight back by the bulls on Friday from the 8235 support area, which should continue into today and a bull Monday, with the possibility of a rise towards the 8370 area and a test of R2 today. The key for that will be the bulls defending any drops down, particularly if the bears get it down to the daily pivot area at 8285.
There are a cluster of key supports here for today, with the 30m coral, 200ema as well as decent 2h support with both the Hull and coral here. As such I would like to see this level hold if it gets tested.
A break of 8280 though and the bears will be aiming for a move down towards the 8235 Friday low level, and with the daily support at 8226 we could see the bulls here if it were to get that low.
Given the general optimism on the US markets on Friday, along with a bullish session in Asia, I am more inclined to have a bullish bias today. They will also want to keep the price above 8300 to start the week!
If the bulls were to break the 8371 level then 8425 is R3 as well as 8411 for daily resistance. Those levels would also be a break above both the Raff channels though so could be a big ask for today.
Main news events today are Fed speakers later but given Fridays inference after the data that cuts are likely to be lower than the previous half a point one, reactions may be muted.
The FTSE100 daily chart remains positive as well with both the Raff channels still heading up, as is the 20d on the Dax40 and S&P500. We also have bullish 2h charts across the board to start the week. Certainly bodes well for a bull Monday anyway!
Good luck today.
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