Technical analysis for FTSE 100 for 4th January 2024
On its 40th anniversary, the UK's FTSE 100 on Wednesday hit its lowest in two weeks, weakened by a rise in bond yields and a sell-off in mining and personal goods stocks, while investors awaited minutes from the U.S. Federal Reserve's December meeting. The blue-chip FTSE 100 index lost 0.5%. The midcap FTSE 250 index was down 1.0%, its biggest one-day decline in over a month. The yield on the British 10-year benchmark note was up for the fourth session in a row, tracking its U.S. peers.
Stocks in Asia dropped, with weakness in China adding to the risk-off mood after Federal Reserve meeting minutes indicated interest rates will remain elevated for longer. A gauge for regional shares slid for a third straight session as benchmarks declined from Australia to South Korea, with Chinese stocks also on a three-day losing streak. Japan’s Topix Index turned higher, reversing early losses on the first trading day of the new year after a holiday break.
Asian shares fell on Thursday and the dollar was near a three-week high as traders dialled back bets of steep and early rate cuts this year, with the minutes of the Federal Reserve's last meeting failing to provide clues to when U.S. cuts might start.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.26% and was headed for third straight day of losses in a sobering start to the year. Japan's Nikkei fell 1% on its first trading day of the year.
China stocks remained under pressure, with uncertainties about a recovery in the world's second-biggest economy keeping investors on the fence. The blue-chip CSI 300 Index fell 0.37%, while Hong Kong's Hang Seng Index eased 0.1%.
FTSE 100 technical analysis for today, 4th January 2024
Initially today it looks like we may well see a repeat of yesterday with a rise and dip play out. A rise towards the 7745 level would fit quite well if the bulls were able to break above the round number resistance at 7700, and 7708 which is the 30m 200ema. We are just hovering around the daily pivot at 7690 to start with as well so the bulls will need to be quick out the blocks once again.
We have NFP tomorrow as well so that may well temper moves ahead of that, while traders will be looking for the data to provide further clues on the labour market, which has shown signs of easing. U.S. job openings dropped by 62,000 to 8.79 million for the third straight month in November, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday.
If the bulls are able to break above the 7745 level (we also have R1 here for today) then the R2 level is 7795 though that feels a big ask for today.
Support wise, then 30m coral is initial support at 7680 and has held overnight, hence thinking that we may well see an initial rise.
Below this then the S1 and key fib area is 7645, and ties in with a double bottom with yesterdays low. A 100 point range seems like it might be a bit optimistic for today with the 7050 and 7650 levels in play but you never know.
Below 7645 then the S2 7597 and round number 7600 are next up, but again, I am not expecting it to get this low.
If traders do expect NFP to soften tomorrow then it lends weight to rate cuts to stimulate the economy now that inflation has dropped back, so bad news may well be good once again.
Good luck today.
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