FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 slipped into the red on Friday but performed better than its European peers thanks to a strong energy sector. London’s main index closed 0.2pc lower at 7,516.
Crude oil prices pushed up to another 7 year high above $93 a barrel, lifting BP’s share price above 400p for the first time since March 2020, while Shell has similarly moved higher and above 2,000p.
A rally in Chinese shares Monday helped to limit a drop in Asian stocks, while global sovereign bonds remained under pressureamid intensifying bets on monetary-policy tightening to fight inflation.
A Chinese equity benchmark climbed about 2% after reopening from a week-long holiday, playing catch-up to last week’s gains in global equities. But a Hong Kong technology gauge retreated, sapped by Alibaba Group Holding Ltd. on speculation SoftBank Group Corp. may sell some of its shares in the firm.
S&P 500 and Nasdaq 100 futures fluctuated and European contracts rose. The dollar ticked up and the euro slipped. Oil’s rally paused at $92 a barrel.
Markets now expect more than five quarter-point Federal Reserve interest-rate hikes in 2022 to quell inflation following a strong U.S. jobs report. Treasuries mostly held losses from last week and Australian bonds slid. Japan’s 10-year bond yield reached the highest since early 2016.
Goodbye Easy Money
The end of easy money is upon us. The U.S. Fed is preparing to raise interest rates in March, and last Friday’s jobs report fueled speculation it may need to move aggressively. The Bank of England just delivered back-to-back hikes, and some of its officials wanted to act even more forcefully. The Bank of Canada is set for liftoff next month. Even the European Central Bank may get in on the action later this year. China, however, appears to be heading in the opposite direction.
‘Madness and Scaremongering’
Russian Ambassador Dmitry Polyanskiy said U.S. intelligence estimates on the impact of any potential Russian invasion of Ukraine are “madness and scaremongering.” Moscow has repeatedly denied that it plans to attack, despite the presence of up to 130,000 troops amassed on the border. The Ukrainian defense minister said Sunday that “the probability of a significant escalation” by Russia “continues to be assessed as low.” Meanwhile, the U.S. and France discussed strengthening NATO’s eastern flank, and German Chancellor Olaf Scholz is set to meet with U.S. President Joe Biden on Monday.
FTSE 100 live outlook prediction analysis for 7th February 2022
The daily resistance level at 7600 got a good reaction on Friday, along with the daily support at 7499 and the bulls have held on to the bounce from that so far. With the drop though the 2 hour chart remains weak with 7577 resistance from a now red coral line, so the bulls will need to break above this (and then 7600 from Friday) to push on higher.
Initially today I am thinking that we will get a bullish day and buying the dips would fit quite well. There is decent looking support at the 7480 area with the key fib and S1 level here – it would be good to see the bulls defend this area, otherwise a slide down to the daily support at 7450 will likely play out. That would also be quite a bearish Monday which wont bode well for any push higher early this week.
The rate rise last week was as expected (and priced in) and the FTSE100 still seems to be the strongest market! The ASX200 had a dip and rise day and I expect that we will do similar today. The media still seems to be pessimistic (no change there then) but the market is holding up well, and I expect we will see further 0.25% rate increases each quarter this year from the BoE.
The S&P has defended the 4450 level on Friday as well, and with the key fib support at 4461 for today, the bulls will be looking to defend this area once again, should it get there. 4542 is the daily resistance level from the moving average and lines up with R1 so the bulls will be looking to push past this, though we have the key fib resistance in the way first at 4528. We may well see the bears have a go here though.
Support is once again at 7499 to start with, then the 7482 level below that as mentioned. 7448 is the next daily level below that, and the bottom of the 10d Raff at 7400 below that. I am not expecting us to slide that low today, however the Raff channels both continue to head up keeping the bulls in the game.
Above the 7600 level then the bulls will be looking for 7625 and then 7655 above that, and with R2 at 7645 we may well see a stutter here. Whilst the Raff channels are still both heading up, the top of them is up at 7800+ for the moment! They may come into play later in the month as seasonally Jan and early Feb is bearish, before the bulls show up in earnest later this month. Bear that in mind!
So, a bullish bias for today by the look of it and buying the dips would appear to be the play. Watch that 4460 S&P level for decent support, for a rise towards the 4555 2h coral resistance. That should bring the FTSE100 along with it so a dip and rise on that too, with 7480 the main support, 7450 below.
Good luck today.
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