Technical analysis for FTSE 100 for 30th August 2024
The UK's main stock index edged higher on Thursday, led by gains in the travel and mining sectors, while shares trading ex-dividend weighed on real estate and beverages.
The blue-chip FTSE 100 index was up 0.4%, while the domestically focused mid-cap FTSE 250 dipped 0.2%, registering its third straight session of declines.
Meanwhile, expected UK economic growth and predictions that the Bank of England will keep interest rates high for longer than in the U.S. have lifted the British pound, making it vulnerable if monetary policy forecasts change.
The FTSE 100 is on track for its third straight weekly rise and a slight pullback for the month, lagging behind both Europe's benchmark STOXX 600 and the U.S. S&P 500 in August.
Investors are awaiting Friday's U.S. Personal Consumption Expenditure data for clues on the quantum of the Fed's likely interest rate cut in September.
Asia shares rose on Friday and are poised for a solid end to the month, while the dollar was headed for its worst monthly performance since last November, after Fed policymakers over the past week or so essentially gave the green light for a rate cut on Sept. 18.
U.S. stock futures also extended Wall Street's positive run, while European futures were mixed.
The sell-off of Aug. 5, when fears suddenly emerged of an imminent U.S. recession, has faded into a distant memory. Those fears have since fizzled, and order has returned to the markets.
The last trading day of the month marks a busy day for Europe, where investors will pore over UK house prices, a data dump from Germany running the gamut from retail sales to unemployment to import prices, and French producer and consumer prices.
That's followed by figures on euro zone inflation, which are expected to show consumer prices slowing to an annual 2.2% in August, from July's 2.6%.
Over in the U.S., the release later today of the core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation - headlines a week that's otherwise been lacking in market-moving data.
However, the bigger focus will likely be on next week's nonfarm payrolls report, given the Fed's focus on the health and state of the U.S. labour market.
Upcoming employment numbers are set to shape how far and fast the Fed would have to cut rates to prevent what Fed chief Powell warned could be an "unwelcome further weakening in labour market conditions", and will determine whether the market is justified in pricing for 100 basis points of easing this year.
In Asia, data on Friday showed core inflation in Tokyo accelerated for a fourth straight month in August, likely giving the Bank of Japan (BOJ) another reason to hike rates in the coming months.
FTSE 100 technical analysis for today, 30th August 2024
The last day of the trading month today and August has seen new all time highs and recession fear driven crashes.... September may well see more upside though! For today we may well get a rise and dip with some month end profit taking ahead of the weekend and I am looking at the 8455 area as key resistance to start with today. This level is the top of the 10d Raff channel and splits the R1 & R2 levels for today. Above this then the R3 level at 8540 could feature if the US PCE data at 1330 is stellar!
The 2h chart has also gone bullish as the bulls have managed to hold the price above the 8400 level and support from the Hull MA is at a close by 8390 to start with. That is just above todays daily pivot at 8381 so should we see this area then I would like to see a bounce from here as well.
A break of 8380 and then the bears will be aiming for the 8340 area and there are a cluster of supports here with S1, 200ema and key fib. The bulls will certainly be looking to end the month strongly though.
Both the Raff channels are heading up still so once again the bias is bullish still on the longer timeframes with buy the dip still the order of the day. Looking once again at the seasonality chart for the S&P500, September continues to be bullish. At least for the first half! We may well see another recession fear wobble mid month though.....
Generally then let's see if we get a rise to the 8455 level and what happens there today.
Good luck and have a great weekend.
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