Technical analysis for FTSE 100 for 3rd April 2024
British shares ended lower on Tuesday as fears about higher-for-longer interest rates sparked a global risk off mood, although a rise in commodities-linked stocks kept losses in check for the resources-heavy index.
Leading sectoral gains, oil and gas stocks advanced 3.1%, tracking higher crude prices hit their highest level this year.
Industrial metal miners followed with a 2.7% rise, as strong factory data from China helped push copper prices to highest in more than a week, while precious metal miners climbed 2.3%, as gold prices scaled another record high.
The globally focused FTSE 100 retreated 0.2% after notching up a more than one-year high earlier in the session as the second quarter kicked off with traders returning after Easter break.
By comparison, the pan-European STOXX 600 dropped 0.7% after notching up an all-time high as traders pared back bets on U.S. interest rate cuts after stronger than expected economic data.
UK equities have underperformed developed economy peers, which have hit record highs this year given a stagnating economy and due to a lack of exposure to the technology sector.
A survey showed British manufacturers activity grew for the first time in 20 months in March, adding to signs that last year's shallow recession has ended.
Meanwhile, separate reports showed British house prices rose last month at their fastest annual pace since December 2022, while prices in UK shops rose at the slowest pace in more than two years in March.
Asia
Asian shares tracked Wall Street lower on Wednesday as U.S. yields held near four-month highs, while a powerful earthquake in the region raised concerns about possible disruptions to the vital chip-making industry.
Markets are also pondering the risk of slower rate cuts ahead of U.S. data and an appearance by the world's most powerful central banker later in the day. Oil extended its ascent, while gold prices hit another a record high.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7%. Japan's Nikkei dropped 1%, after a 20% blockbuster rally in the first quarter.
Taiwan's shares skidded 0.8% after a powerful earthquake with a magnitude of 7.2 rocked Taipei, the capital, sparking a tsunami warning for the islands of southern Japan and the Philippines.
On Wall Street, a recent run of solid U.S. economic data - including an unexpected expansion in the manufacturing sector and the slow easing in the labour market - has stoked doubts about the amount of the Fed easing likely this year and next. A pair of Fed policymakers on Tuesday both said they think it would be "reasonable" to cut U.S. interest rates three times this year, but markets only see about 69 basis points in easing.
Investors now await euro zone inflation data, which could surprise on the downside after German inflation eased more than expected. In the U.S., a private payrolls report and a services sector survey are the key data risks, along with a speech from Fed Chair Jerome Powell on the economic outlook.
FTSE 100 technical analysis for today, 3rd April 2024
That was a bit of a frustrating one for the orders yesterday but the shorting at 8000 area was definitely the trade of the day. The bears have managed to almost hit 7900 now, but we have decent support here to start with as we have the key fib, S1 and overnight defence all here.
As such we may well see an early rise towards the 7950 area where we have the 200ema on the 30m as first resistance and a possible drop off from here. We have Eurozone inflation data today (at 10am) and ISM services at 3pm in the US, along with another Powell speech at 17:10 - expect some volatility at these times.
Below the 7900 support area then the bears will be aiming for the 7866 S2 level and a bounce here may materialise. It's also just below the 20d Raff channel at 7877 and the bulls will be keen to try to keep the bullish sentiment alive and retest the 8000 level this week. Should we dip below the 7900 level then I would like to see this area hold.
Resistance wise 7950 as mentioned then 7996 above that for R1. Also we are back at the 8000 level and the bulls will be aiming to surpass that spike high from yesterday at 8017. They will really need to pull away from the 8000 level though and that may be a big ask for today.
Higher up is R2 at 8053, though again, might be a step too far for today. The bearish sentiment in the US is weighing things down for the moment with the tech sector easing off a fair bit at the moment. The S&P500 is also retracing to the bottom of the 20d Raff channel, currently at the 5190 level but the bulls will want to defend this.
The ASX200 had a sharp drop at the start of their session but then bounced along around the S2 level for the remainder. We may well see something similar if the bears drive it down off the 7950 level towards that 7870.
So, while the daily chart remains positive with both Raff channels heading upwards there is some short term weakness creeping in once again and the bearish 2h chart now has a red coral as well, with resistance at the 7985 level on that. The bears currently have the upper hand so it will be up to the bulls today really.
Good luck today.
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