Technical analysis for FTSE 100 for 29th January 2024
The FTSE 100 clocked in biggest percentage gain since last October, as upbeat earnings from European luxury firms boosted shares of Burberry and Diageo, while investors took comfort from data that showed UK consumer sentiment hit a two-year high. The FTSE 100 climbed 1.4% on Friday to log its first weekly gain of the year and the biggest in more than four months. The midcap FTSE 250 index also rose 0.6%, marking its biggest weekly gain in six weeks.
Adding to the upbeat sentiment, a survey showed British consumers were their most confident since January 2022 as lower inflation helped them to feel better about their finances.
Stocks in Asia started the week broadly on a positive note after China’s latest measures to bolster its equity market injected optimism. Energy shares were boosted by higher oil prices. China’s securities regulator said on the weekend it will halt the lending of certain shares for short selling from Monday. The latest steps add to measures aimed at arresting a slide in the nation’s stocks which has seen the MSCI China Indextumble about 60% from a February 2021 peak.
Chinese equities led a rally in Asian stocks to start the week, after regulators took new steps over the weekend to support the market. Oil climbed after a step-up in Middle East violence, as a missile attack by Yemen's Houthi group caused a fire on a fuel tanker in the Red Sea, while three U.S. troops were killed after a drone attack in Jordan.
U.S. stock futures pointed 0.1% lower after the S&P 500 slipped 0.07% on Friday to snap a five-day streak of setting fresh all-time closing highs, although it marked a new intraday record during that session. The backdrop for that was a continued moderation in consumer inflation in Friday's data, which added to the narrative for Fed rate cuts in coming months, but also suggested policy makers had little pressure to rush.
FTSE 100 technical analysis for today, 29th January 2024
Markets look like being in limbo, more or less, until the Federal Reserve announces its policy stance on Wednesday. Traders are clinging to bets that the US central bank will cut interest rates in March, with about a 50% probability priced in. Those wagers strengthened modestly after the key PCE deflator gauge slowed as expected. Persistent services costs underscored concerns that the Fed will signal it wants to see further progress before considering policy easing.
Despite the ramping up of Middle East tensions the futures prices have held up well, with mostly the oil price affected. Initially today we are opening just below Fridays close and high at 7650, so a small drop down to the test the daily pivot at 7614 may well play out initially. We are also just testing the top of the 20d Raff channel at 7640 so initial resistance from that to start with.
If the bulls do come out fighting again today then the sentiment will remain bullish, and having broken above the 7580 resistance level on the daily chart on Friday they will be keen to capitalise. The 2h Hull MA continues to rise and any drop down to retest that should find support, currently at 7595 but steadily rising. That could well help with that 7615 area holding too.
Below the 7614 level then the 7555 area is the next major support with the key fib and 30m 200ema here. Should it get that low then I would expect to see it hold.
On the upside, if the bulls break the 7650 level then R1 at 7684, though it feels like they will more than likely try for 7700 and we see a bit of a bull Monday. Especially if the S&P start to push on again and breaks above the 4905 Hull MA resistance.
So generally today it's looking positive despite the media foaming at the mouth about WW3 breaking out sometime soon. A rise towards the 7700 area and a test of the 10d Raff at 7705 looks distinctly possible.
Good luck today.
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