Technical analysis for FTSE 100 for 12th September 2024
The UK's benchmark FTSE 100 stock index ended lower on Wednesday, led by a decline in Rentokil shares after the pest control company warned on North America weakness, while investors assessed the latest U.S. inflation numbers.
The blue-chip FTSE 100 was down 0.2%, while the mid-cap FTSE 250 lost 0.6%.
Stock indexes came under pressure globally after consumer prices in the United States increased marginally in August, but underlying inflation showed some stickiness, which could discourage the Federal Reserve from delivering a half-point rate cut next week. Over 80% of traders now expect the U.S. central bank to cut interest rates by 25 basis points, according to CME Group's FedWatch tool.
Meanwhile, data showed Britain's economic production grew by less than expected in month-on-month terms in July, showing no change after zero growth in June.
A rally in the world’s largest tech companies spurred a stock-market rebound in a volatile session that had Wall Street traders digesting faster-than-anticipated inflation data. The S&P 500 climbed 1.1% and the Nasdaq 100 rallied 2.2%. It was the first time since October 2022 that each gauge erased an intraday loss of at least 1.5%. Chipmakers led gains, with Nvidia up 8%. Treasury two-year yields edged up on bets the Federal Reserve will move gradually with rate cuts.
Asia & Overnight
Asian shares bounced on Thursday, tracking a tech-driven rally on Wall Street, while the dollar held onto gains after U.S. core inflation surprised slightly on the upside and dashed hopes of a large rate cut by the Federal Reserve next week.
Investors are now awaiting a policy decision from the European Central Bank later in the day where a rate cut is almost a certainty, but the question remains whether it would move again in both October and December.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 1%. The Nikkei jumped 3%, helped by a weaker yen, which pulled back from its 2024 high of 140.71 per dollar.
Earlier in Asian trade, the yen had eased further to a low of 142.95, but was last flat at 142.40 per dollar, perhaps helped a little by hawkish comments from a senior Bank of Japan official who called for raising rates at least to 1%.
EUROSTOXX 50 futures rose 1.2% while FTSE futures gained 0.9%. U.S. stock futures were slightly lower.
Overnight, U.S. data showed core consumer price index (CPI) rose 0.28% in August, compared with forecasts for a rise of 0.2%. It was enough of a steer for markets to almost abandon the chance of a half-point rate cut from the Federal Reserve next week, with probability for such a move at just 15%.
Oil bounced overnight on fears that Hurricane Francine could lead to lengthy production shutdowns in U.S. Brent crude futures held at $70.65 a barrel, after gaining 2% overnight. It also found support at $68.69, the lowest level in almost three years.
FTSE 100 technical analysis for today, 12th September 2024
Buying the dip played out well yesterday following the opening drop of 8220. Overnight we have seen more strength kick in following the decent Tech performance, and we may well see some further upside today. We do of course have the ECB (highly likely) rate cut later on today, at 1315. That's followed by jobs data and PPI in the USA at 1330. Expect some volatility around both of those times.
Initially today we are just at the 8290 double top level and the bulls still have 8320 in their sights. However we may well get a drop to start with due to that double top, and a test go the 8260 area where we have support from the 30min EMA.
If 8260 breaks then the next cluster of key supports are at the 8230 level, with the 30m coral, 200ema and the daily pivot all here. If we see that level then a long here is worth a go.
For the bulls, if we get 8320 then we should get a stutter here, but I imagine they will want to break that while they have momentum and push for the higher level at 8370 to test the top of the 20d Raff channel. We are just pushing through the top of the 10d channels as I write this email, which is at 8270.
Following the bounce the daily ema's have gone bullish again (only a modest drop off the 8280 area recently once they went bearish, 100 points or so) so we now have 8260 support from that as well.
Generally then today looks to remain bullish and buying the dip is the theme for today as well.
Good luck today.
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