FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 edged higher as an easing of China’s Covid curbs lifted spirits across global markets. After rising to its highest level since April 22, the blue-chip index added 0.2% to 7,600. Asian and European stocks were in the green on Monday on news that Shanghai authorities will cancel many conditions for businesses to resume work from Wednesday, easing a city-wide lockdown that began two months ago.
Stocks in Asia fluctuated and Treasuries sold off across the curve as oil jumped, adding to worries about how aggressive central banks will need to be to rein in inflation without derailing growth.
Technology stocks underpinned gains in Hong Kong, while China rose as data showed factory activity shrinking at a slower pace and a Shanghai Covid lockdown eased. Equities in Japan were little changed. US contracts edged up, while European futures dipped.
Treasury yields jumped more than 10 basis points after German bunds and European bonds sold off. German inflation hit an all-time high, adding to pressure on central bank policy makers to tame rising prices. The dollar advanced.
Crude oil rose to around $118 a barrel after the European Union agreed to pursue a partial ban on Russian oil in response to the invasion of Ukraine. Higher energy and food costs are keeping upward pressure on prices globally and squeezing consumers.
Global stocks are on track to end the month with modest gains amid skepticism about whether the market is near a trough and as volatility stays elevated. Fears that central bank rate hikes will induce a recession, stubbornly high inflation and uncertainty around how China will boost its flailing economy are keeping investors watchful.
Oil Ban
European Union leaders agreed to pursue a partial ban on Russian oil, paving the way for a sixth package of sanctions to punish Russia for the invasion of Ukraine. The sanctions would forbid the purchase of crude oil and petroleum products from Russia delivered to member states by sea, but include a temporary exemption for pipeline crude until a solution is found that satisfies the energy needs of Hungary and other landlocked nations. It would cost Vladimir Putin up to $10 billion a year in lost export revenue, according to Bloomberg calculations, forcing Russia to sell its crude at a discount to Asia, where it’s already changing hands at about $34 a barrel cheaper than the price of Brent futures. Currently more Russian oil than ever is on board tankers heading to China and India.
FTSE 100 live outlook prediction analysis for 31st May 2022
Nice reactions at the 7625 and the 7580 levels yesterday and for today they are the levels that the bulls and bears will need to break. On the upside, the 7670 level still beckons if the bulls were to push on, while the key support for today is down at the 7561 level with the 30m 200ema here. We do have the green 2h coral also at 7587 to test still, so could see a reaction here early on.
However, it has a feel for a bit of bear Tuesday, at least to start with, and we could see a replication of the ASX200 moves today. The US will be back after their Memorial Day holiday, which could help fuel some buying later as they can sometimes return more optimistic! That may well help a bounce later across the board.
With the drop off the 7620 and the bulls never regaining it, the 2h chart has gone bearish and we have dropped off the Hull MA at 7620 again overnight. The Raff channels on the daily are looking more bullish now though with both heading up, and the 25ema is still untested at 7485 for support. Sell in May and go away didn’t really kick in as such, and in fact does seem to be getting less and less prominent each year. Last day of the month today though so we may well see some profit taking and banking, hence why we may well see a bit of a slide down to the 7560 level.
If the bears were to break below that then 7552 and 7548 are the next supports, with a possible trip down to the 7453 level, and a test of the 25ema on the daily at 7485. Doesn’t feel like we will get that low today, despite the negative news flow. That said though, UK business confidence rose for the first time in three months in May, with more companies planning to increase prices.
S&P500
As mentioned I think we may well see a bit of bearishness today, and a dip down to the 4150 area. Below that then 4100 is next up and a test of the 2h coral here. The daily chart remains bearish, and we are just tracking the top of the declining 20d Raff channel at the moment. The bulls have failed to push above that and with that at 4209 today, along with the daily coral at 4194 we may well see any rallies get sold into, initially at least. This afternoon we may see the bulls appear, and if 4150 holds then a climb back towards the 4200 level. Above 4210 then 4220 and 4234 are next up.
Dax40
Could well slide down to the key fib at 14457 this morning and if that gets defended a bounce back to the 14550 daily pivot level would fit well. Upside resistance above that is at the 14600 level with the red 30m coral here, and just below R1 at 14609. Below the 14457 level then a slide to the green 2h coral at 14375ish may well play out. Its rising quite steeply though so we will just keep an eye on that for when it does eventually get tested and I will post in the room.
Good luck today.
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