Technical analysis for FTSE 100 for 16th October 2024
Britain's FTSE 100 fell on Tuesday, as a plunge in commodity prices knocked heavyweight oil and mining stocks lower, while a mixed labour market data put the Bank of England on track to cut interest rates next month.
The blue-chip FTSE 100 closed 0.5% lower, while the mid-cap FTSE 250 index slipped 0.1%. The FTSE 350 energy index lost 3.5%, the biggest sectoral loser, as crude prices , slid nearly 5% due to a weaker demand outlook and after a media report suggested Israel would not strike Iranian oil targets, easing fears of a supply disruption.
Industrial metal miners shed 3.1% as copper prices hit a three-week low, pressured by confusion about the scale of stimulus measures in top metals consumer China.
Investors also focused on data that showed British pay grew at its slowest pace in more than two years in the three months to August but unemployment rate fell to 4.0%, the lowest reading this year.
Markets continued to show around an 80% chance of a quarter-point UK interest rate cut on Nov. 7. Data due on Wednesday is expected to show Britain's consumer prices index fell to 1.9% in September, below the BoE's 2% target, although core inflation is likely to be stronger, according to the economists polled by Reuters.
Asia & Overnight
Asian equities fell on Wednesday after disappointing earnings from Europe's biggest tech firm ASML dragged chip stocks around the world, while expectations that the Federal Reserve will take a modest rate cut path propped up the dollar.
Also weighing on the market was lacklustre earnings from French luxury giant LVMH that showed demand in China for luxury goods worsened, denting some of the enthusiasm around China spurred by stimulus measures.
Tech-heavy South Korean stocks fell 0.6%, while chip stocks led Japan's Nikkei 1.8% lower. Taiwan stocks slipped 1.2%. That left MSCI's broadest index of Asia-Pacific shares outside Japan down 0.32%.
On the macro side, investors remain enthralled by U.S. rates and the shifting rate cut expectations in the wake of data that has shown the U.S. economy to be resilient and inflation to tick just a bit higher.
That has kept traders on the fence of how deep the rate cuts will be in the near term, with traders pricing in 46 basis points (bps) of easing this year. The Fed started its easing cycle with an aggressive 50 bp cut in September.
Markets are ascribing a 96% chance of a 25 bp cut from the Fed next month, CME FedWatch tool showed, compared to a 50% chance a month earlier when investors were weighing towards another 50 bp cut from the U.S. central bank.
The dollar as a result has surged in recent weeks, with the U.S. dollar index , which measures the U.S. unit versus major rivals, at 103.24, hovering near its highest levels since early August.
In commodities, oil prices were steady after steep declines in the previous session as investors contended with uncertainty around tensions in the Middle East and what it means for global supply. Brent crude oil futures rose 0.4% to $74.56 a barrel. U.S. West Texas Intermediate crude futures rose 0.5% to $70.93 per barrel.
FTSE 100 technical analysis for today, 16th October 2024
The bears certainly took advantage of the slide from 8330 yesterday and a circa 100 point drop ahead of today's CPI figures. That has just been released and shows CPI rose by 1.7% in the 12 months to September 2024, down from 2.2% in August 2024. As such, that may help the bulls in the short term who will be looking to get it back above 8300.
However, the 2h chart is bearish to start with and has 8271 as resistance which also links in with the daily pivot and the 30m 200ema. We could see the bears try again from here, but a break of that will likely lead to the 8314 key fib level. Once again the bulls need to break that 8330 level to push higher, and if they manage that then the next significant level is 8408 R3, and then the daily resistance at 8459 - though that's probably a big ask for today!
Support wise, 8220 remains, and we bounced just above this overnight, and then 8196 S1 below that. If we see that 8200 area then a long here is worth a go. If the bears break 8196 though then I would be looking for a slide down towards the 8150 level where we have S2 for today, and also rather crucially the bottom of the 2 Raff channels.
The US markets rolled over a bit yesterday and we have a bearish 2h chart for the S&P500 for today with the 5860 as Hull resistance. As such we could well see a rise and dip play out on that as well today.
So expecting a copy start to the day as the CPI news is digested and a bit of a battle between bulls and bears till the US provides some more direction later. Generally expecting a rise and dip today though, with that 5856/5860 resistance for the S&P500.
Good luck today.
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