Technical analysis for FTSE 100 for 10th April 2024
Britain's blue-chip share index closed lower on Tuesday after defence stocks succumbed to a bout of profit-taking and offset gains in mining and oil shares that were lifted by stronger commodity prices.
The FTSE 100 index of top British firms slipped 0.1%, with defence company BAE Systems, aerospace supplier Melrose and engine maker Rolls-Royce (LON:RR) dragging the benchmark down with losses in the range of 3.2% and 4.5%.
Following strong performance in recent years, defence stocks across Europe tumbled after Goldman Sachs said that valuations in the sector likely presented more downside than upside risk going into 2025.
Investors were also cautious ahead of U.S. inflation data, the European Central Bank's monetary policy decision and UK GDP data this week that could set the tone for the pace of monetary policy easing across regions this year.
Investors are closely watching market bets on the Bank of England (BoE) and the Federal Reserve policy paths. Markets have priced in 67 basis points of interest rate cuts by the BoE in 2024.
An early Easter boosted food spending in Britain last month, lifting retail sales by the most since August, but the broader picture remained subdued as wet weather dampened demand for other goods, the British Retail Consortium said.
ASIA & OVERNIGHT
Asian stocks traded higher on Wednesday, unfazed by a rating downgrade to China by Fitch which triggered a mild domestic sell-off but which analysts said did not take into account the economy's future performance.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.7%, after U.S. stocks ended the previous session with mild gains. The index is up 0.2% so far this month.
The yield on benchmark 10-year Treasury notes was at 4.3556% compared with its U.S. close of 4.366% on Tuesday. The two-year yield , which rises with traders' expectations of higher Fed fund rates, touched 4.7384% compared with a U.S. close of 4.747%.
U.S. consumer price data due on Wednesday will be closely watched by investors as they seek direction on the next move in interest rates. The data is expected to show a rise in headline inflation to 3.4% year-on-year, from 3.2% in February.
The prospect of a U.S. interest rate cut as early as June is now being considered by financial markets, with the inflation reading seen as key to the central bank's next move.
In the U.S., the Dow Jones index finished down 0.02%, the S&P 500 gained 0.1%, while the Nasdaq Composite rose 0.3%. U.S. crude ticked up slightly to $85.34 a barrel. Brent crude rose to $89.52 per barrel. Gold was slightly higher. Spot gold traded at $2,352.93 per ounce.
FTSE 100 technical analysis for today, 10th April 2024
A decent hold of 7925 yesterday which saw the bulls eventually climb towards the 7990 level which it looks like we will test first thing today. I am still looking also for a test of the 8020 resistance area and today's US CPI news at 13:30 may well be the catalyst for that. The forecast is for a slight drop to 3.7% from 3.8% previously.
So with initial resistance at the 7992 level as we have R2 and they fib here, along with it also being a key daily level, we may well see an initial drop down to retest support, now at 7952 for a test of the green 30m coral.
Above the 7992 level then 8020 as mentioned aligns with 8016 for R3. If the bulls can gain some decent momentum today (and the S&P climbing strongly from 5160 yesterday will help) then we may well see the 8000 level try to be defended if we breach it with some conviction.
If they do then ultimately a push towards the 8070 level may well play out but may be later in the week.
Below the 7950 level then 7923 is the still green 2h coral line and would set up a double bottom with yesterday's support area. 7921 is also S1 for today.
However, if the news sees the bears manage to drive this down then the 7895 S2 level would likely be tested. 7850 is still the lowest daily support for the moment though with the bullish momentum still in play, along with rising 20d Raff channels I don't expect it to get there today.
Later on today we also have the FOMC minutes at 1900, so we will likely get some volatility around then as well.
It's also dividend day, which is 12.89 for today, so bear that in mind as your broker will apply that to daily bets - either at 16:30 or 21:00.
Good luck today, let's see if we get a test of the 8020 level....
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