Technical analysis for FTSE 100 for 5th June 2024
London stocks closed lower on Tuesday, weighed down by resources stocks tracking a fall in commodity prices, while investors assessed the chance of U.S. rate cuts against a backdrop of faltering manufacturing activity.
The blue-chip FTSE 100 index was down 0.4%. The mid-cap FTSE 250 dropped 0.9% after three straight sessions of gains.Declines in the market were led by precious metal miners, which slumped 3.8% in their worst day in over a month, after gold prices retreated more than 1% on a firmer dollar.
Heavyweight energy stocks like BP and Shell fell 3.8% and 2.1% respectively, after ratings agency S&P Global revised lower BP's credit outlook and oil prices slipped by more than 1%. The oil and gas sector logged its worst day since January 2024.
On the bright side, utilities stocks gained 2.0%, the most among their peers.
Investors weighed a potential September rate cut by the Federal Reserve as U.S. manufacturing activity dipped for a second month, and American job openings fell more than expected, according to the JOLTS report.
However, focus returned to the European Central Bank, which is due to meet on Thursday and is expected to trim interest rates by 25 basis points.
Asia & Overnight
Asian stocks rose on Wednesday, while the dollar was steady as a softening U.S. labour market firmed up bets of an interest rate cut in September from the Federal Reserve ahead of a crucial payrolls report this week.
Investor worries of a cooling U.S. economy, however, kept a lid on risk appetite, while the focus in Asia is on how Indian markets fare after stocks sank and the rupee slid on Tuesday following voting results that showed a slimmer-than-expected victory margin for Prime Minister Narendra Modi.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.24%, while the Nikkei fell 1% as the Japanese yen flirted with two-week highs.
China stocks were mixed, with the blue-chip CSI300 index little changed in early trading, while Hong Kong's Hang Seng index rose 1%.
China's services activity in May accelerated at the quickest pace in 10 months while staffing levels expanded for the first time since January, a private sector survey showed, pointing to sustained recovery in the second quarter.
Data overnight showed U.S. job openings fell more than expected in April to the lowest level in more than three years, a sign that labour market conditions are softening.
In commodities, oil prices extended losses slightly from the previous session in early Asian trading on growing worries around demand after an industry report showed builds in U.S. crude and fuel stockpiles. Brent crude futures eased 0.1% to $77.47 a barrel, while U.S. West Texas Intermediate crude futures fell 0.12 to $73.16 a barrel.
FTSE 100 technical analysis for today, 5th June 2024
The FTSE100 long from 8207 is still running and the bounce has gained some further momentum overnight which is nice. That may roll through into a more bullish session today, as long as the bulls can defend any drop down to the support area at 8260-8240.
Optimistically we may well be on for a test of the daily resistance level at 8324 today, and possibly may even see the higher one at the 8370 area this week. Germany jobs data yesterday disappointed, and we have the ECB rate decision tomorrow with a small reduction expected. That may well act as a bit of a catalyst if so for a push up to start June off.
Immediate resistance for the FTSE100 is at the R1 8284 level, and the key fib just above this 8292. As such if we do get an opening drop it may well be from this area.
8310 is then also R2 if we get an early spike higher but fall short of the 8325 daily resistance level.
Support wise, then the 8260 200ema is first up, with the daily pivot at 8241 below that.The bulls will certainly be keen to keep the momentum going though and will be fighting to hold the supports.
A break of the 8240 level though and then S1 at 8215 comes into play, and yesterday's low at 8200 below that. 8179 is then the key fib and just above S2 at 8172 if it gets really bearish today.
For the bears, both the Raff daily channels are heading down now, but after the bounce off 8200 the 2h chart is on the cusp of going bullish, with 8265 Hull MA support trying to lock in. Bit of a battle between bulls and bears going on and likely to play out today.
The ASX200 had a bullish day and we may well follow suit. On the news front the main ones are US news at 15:00 for ISM Services PMI, with a slight uptick to 50.5 expected and Bank of Canada interest rate at 14:45 with a small 0.25% cut forecasted. Will that be the start of other countries following suit?
So a few levels to look for today and with the various 2h chart being bullish we may well see some more upside.
Good luck today.
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