FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 inched up 1% Wednesday to 7,580 led by gains from oil major Shell and miners Glencore and Anglo American.
Traders shrugged off the latest inflation data, which showed annual inflation last month rose to a three-decade high at 7%, intensifying a cost-of-living squeeze faced by households and hit to the profits of supermarkets such as Tesco. The grocery giant fell 2pc to weigh the most on the index after warning of a drop in profits this financial year due to the tough economic conditions and pressure on consumers.
Most Asian stocks rose Thursday after China again indicated looser monetary policy is on the way and bond traders dialed back aggressive bets on Federal Reserve interest-rate hikes.
An Asia-Pacific equity gauge climbed a second day as Japan and China pushed higher. U.S. and European equity futures were steady following a tech-sector rally that helped Wall Street snap a three-day drop.
China is expected to cut a key policy interest rate for the second time this year on Friday and reduce the reserve requirement ratio soon — the nation’s cabinet has strongly signaled the latter as Covid lockdowns sap the economy.
“We have actually turned cautiously optimistic on the Chinese equity market in April already,” Stefanie Holtze-Jen, Asia-Pacific chief investment officer at Deutsche Bank AG in Singapore, said on Bloomberg Television. “We perceived the communication from the government as the line in the sand.”
Outside of China, monetary settings continue to tighten in the campaign to curb the cost of living. South Korea raised its key interest rate and Singapore further tightened policy, spurring advances in their currencies.
Shorter maturity Treasuries extended a climb that suggests investors are rethinking just how far the Fed will hike rates. Some moderation in the core U.S. consumer-price measure has spurred speculation inflation is peaking, though a record producer-price print cautions against quick judgments.
Targeting Putin
President Joe Biden is sending Ukraine $800 million in new firepower — including artillery, helicopters, ammunition and other military hardware that will test the limits of how far aid can go without drawing the U.S. directly into the war. The U.S. Department of Justice is also targeting the personal wealth of Vladimir Putin and his family. Western governments have long suspected the Russian president has amassed a secret fortune through corrupt means, but little hard evidence has ever emerged. In Germany, authorities impounded the world’s largest superyacht, which was undergoing a refitting, after determining it was owned by Russian billionaire Alisher Usmanov’s sister.
Sri Lanka Junk
Sri Lanka was downgraded deeper into junk by Fitch to CC, one step above default. Earlier, S&P also cut its score to CC, the third-lowest level. The government said Tuesday it will no longer service external debts to conserve foreign currency for crucial imports, such as fuel, as the country is rattled by power cuts, food shortages and a currency in free fall. There have been mounting calls for President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa, to resign. So far, China has yet to respond to Sri Lanka’s pleas for $2.5 billion in credit support.
China Cuts
China’s focused on its own economy, and the central bank is expected on Friday to cut its key policy interest rate for the second time this year to help bolster an economy under strain from Covid lockdowns. The People’s Bank of China is also likely to reduce the reserve requirement ratio, the amount of cash that banks must hold in reserve, after the State Council suggested it would do so.
FTSE 100 live outlook prediction analysis for 14th April 2022
Last day of the week with the public holiday tomorrow and we also have Option Expiry and the ECB rate decision today to throw into the mix. As such we may see a bit of a choppy session as we have the longer weekend and we may well see more positions closing ahead of that.
OPEX will kick in at around 10:10am and could well spike up then drop back as the various futures contracts roll over. The move usually last around 15 minutes and then retraces whatever spike direction.
Initially we have the red 2h coral at 7596 as resistance which could trigger a dip and rise to play out, as there is then decent support at the 7550 area with S1 and the daily support here. The bulls will be keen to defend any drops today to build on the bounce from yesterday. Talking of which, that bounce has turned the 2h chart bullish again with support from the Hull MA at 7581 to start with. So a bit of a tight range on the 2h to start with this morning. Which level will break first!?
Below the 7580 then 7550 as mentioned though below that then the bears would be looking to take the FTSE100 down to 7501 level where the next daily support is, though we have the 10d Raff channel bottom at 7534. The bears therefore could struggle to take it too much below this as the Raff channels are both still heading up.
For the bulls, they will be looking to break above the 7600 level, being the key round number, and also a cluster of resistance levels here as you can see from the table. Above this then 7623 is next up, with 7644 above that. With R2 and the key fib at 7627 then I think we will see a stutter here, if not a cap of any rises at this area today. I expect we may well see a dip towards the close of play as the longs close ahead of the weekend.
S&P500 & DAX40
Similar looking picture for these two today as well with a dip and rise looking like it will play out. The Dax is just on R1 and the key fib at 14180 to start with which could trigger a drop down to the pivot and 30m coral support at 14070 and then a bounce. While the S&P has 4463 key fib resistance within touching distance as I write this, and a drop on that to the pivot at 4430 would also fit well.
Summary
Not to much more to say really – expect a bit of chop today as the light volume continues and with OPEX and ECB we could see some volatility pick up.
Have a great long weekend and next email will be on Tuesday next week.
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