Technical analysis for FTSE 100 for 28th May 2024
European stocks closed slightly higher on Monday and government bond yields eased, amidst hints of upcoming interest rate cuts by the European Central Bank (ECB), though trading activity was light as some key global markets were shut.
The pan-European STOXX 600 index closed 0.3% higher, in touching distance of an all-time high hit earlier this month.
Key policymakers at the ECB said the bank has room to cut interest rates as inflation slows but must take its time in easing policy, even if the direction of travel is already clear.
Spotlight this week would be on a reading of May consumer prices for the euro zone due on Friday, while individual inflation readings from Germany, Spain and France will also be released throughout the week.
The ECB looks set to start easing interest rates in its upcoming meeting next week, with bets showing an over 90% probability of a rate cut, according to LSEG data.
U.S. inflation data, also due on Friday, could help traders assess the timing and numbers of possible rate cuts by the Federal Reserve this year.
Trading was light in absence of U.S. and UK participants as markets there were shut for a public holiday.
Asia & Overnight
Asian shares held a mixed tone on Tuesday after rallying the previous session, as rising bets of an imminent European rate cut helped risk appetite ahead of some key inflation data.
A slew of European Central Bank officials said overnight the ECB has room to cut interest rates as inflation slows, underscoring expectations for a rate cut on June 6. With debate now shifting to subsequent moves, markets have fully priced in two rates cuts by October this year.
That helped Wall Street stock futures firm ahead of the reopening of U.S. markets after a public holiday. S&P 500 futures rose 0.1% and Nasdaq futures gained 0.2% before a line-up of Federal Reserve speakers later in the day for the latest guidance on rate outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4%, thanks to a 0.7% gain in Hong Kong's Hang Seng index, after gaining 0.9% on Monday
Japan's Nikkeion the other hand, slipped 0.3%, reversing some of the 0.7% advance a day ago.
The big risk events this week are not due until Friday when U.S. figures on core personal consumption expenditures (PCE) - the Federal Reserve's preferred measure of inflation - and euro zone inflation data will set the trading tone.
Oil prices were mostly steady on Tuesday. Brent futures rose 0.1% to $83.19 a barrel.
FTSE 100 technical analysis for today, 28th May 2024
The bulls have fought back from Friday's low at the 8250 level and will be keen to keep the price above the 8300 level today, for a push up towards the key resistance level at 8365. With the 2h chart now bullish and showing decent support at the 8295 level a bounce here this morning would be a good start to the week. The big news events don't come through until Friday really so we may well see it all being fairly muted till then.
Should the bears break below the 8295 level today then a slide down may well play out for a bear Tuesday and a test of the 8278 S3 level, and 8268 for a test of the 20d Raff channel bottom. We are also then also in the area for a double bottom with Fridays low and the 8250 level. That said, I am thinking that the 8295 level will put up a decent defence.
If the bulls do keep the upper hand today then the 8341 200ema is the first level, and also coincides with the high from yesterday, albeit out of hours, with the 8353 R1 above that.
A concerted effort to push higher should then see the 8367 level, then R3 at 8390. The next daily resistance level of note is 8408 and if we were to get back up around the 8400 level then it bodes well for some more strength into June.
Seasonality suggests a dip in mid to end May, and that has been fairly muted so far, only dropping from 8480 to the 8250 level overall. It's possible that may be it and we start to see some more bullishness kick in, especially if some rate cuts materialise sooner rather than later. In the UK some pre-election giveaways may also appear, such as tax cuts etc which may well help in the short term ahead of the Labour victory(!!).
The only news of note today is the 15:00 USA CB consumer confidence, with a slight drop forecasted. Might see a little bit of volatility around then.
Good luck today.
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