ECB Rate cut expected | 8250 8200 support | 8289 8321 resistance

ECB Rate cut expected | 8250 8200 support | 8289 8321 resistance

Technical analysis for FTSE 100 for 6th June 2024

Britain's FTSE 100 closed higher on Wednesday, buoyed by economic data cementing bets for a September rate cut by the U.S. Federal Reserve, while investors keenly awaited the European Central Bank's interest rate decision on Thursday.

The blue-chip FTSE 100 gained 0.2% after two sessions of falls, while the mid-cap FTSE 250 closed 0.2% lower.

Signs of cooling in the U.S. labour market, where data revealed low job openings and a less-than-expected rise in private payrolls reinforced predictions of a September rate cut.

Domestic data showed that growth among Britain's services businesses eased in May from an 11-month high in April, potentially easing the way for a Bank of England rate cut.

An eagerly anticipated 25 basis points interest rate cut by the ECB on Thursday also lifted sentiment. Investors will also await crucial U.S. payroll data on Friday to further gauge the Fed's interest rate path.

U.S. stock markets closed higher, with main indexes rebounding from early losses as weak labor market data, including a three-year low in job openings, fueled expectations for a Federal Reserve rate cut.

Economic data showed U.S. factory orders rose 0.7% to $588.2 billion in April, while job openings decreased by 296,000 to 8.059 million for the same month.

Most S&P 500 sectors ended higher, led by gains in real estate, consumer staples, and information technology stocks, while materials and energy stocks closed lower.

The Dow Jones Industrial Average was up 0.36% and closed at 38,711.29. The S&P 500 gained 0.15%, ending the day at 5,291.34, and the Nasdaq Composite rose 0.15%, finishing the session at 16,853.74.

Asia & Overnight
Asian shares gained on Thursday on rising expectations the U.S. Federal Reserve will likely cut interest rates in September, while the euro advanced ahead of the European Central Bank policy meeting where a rate cut is widely expected.

The shifting Fed expectations lifted oil prices and dragged Treasury yields to their lowest in two months after data this week hinted the U.S. labour market was easing.

MSCI's broadest index of Asia-Pacific shares outside Japan was 1.14% higher, led by tech stocks. The index was on course for a 2.7% gain in the week and snap its two-week losing streak. Japan's Nikkei rose 1%.

On Wednesday, the S&P 500 and Nasdaq indexes hit record closing highs, with AI darling Nvidia becoming the world's second-most valuable company after breaching market valuation of $3 trillion and overtaking Apple

The May private payrolls report on Wednesday was the latest data to suggest an easing in the labour market and comes after a report on Tuesday showed job openings fell in April to the fewest in more than three years.

Markets have taken their cue from the labour data this week and are now pricing in 49 basis points of cuts from the Fed this year, with a rate cut in September at 69% chance compared with 47.5% a week earlier, CME FedWatch tool showed.

In commodities, Brent crude futures rose 0.48% to $78.79 a barrel, while U.S. West Texas Intermediate crude futures rose 0.66% to $74.55.

FTSE 100 technical analysis for today, 6th June 2024

Well the US markets certainly got their bull on yesterday and once again we saw some new record highs. We now look towards the expected rate cut from the ECB today, With a much anticipated 0.25% cut we may well see markets drop on the news as its already been priced in, however expect some volatility around this at 13:15, and then the press conference at 13:45.

We also have US NFP jobs news out tomorrow so even more volatility for that.

Initially today we may see the FTSE drop down from this 8265 level to test the 30m coral at the 8255 level, and it would be good to see the bulls try and defend any drops today. Buy the rumour sell the news really to play out ahead of the ECB later.

Below the 8250 level then it could slide to test S1 at 8226 and possibly even another test of the 8200 level. Should it test this then I would like to see it hold as we have S2 and the key fib both here. Certainly worth a long anyway.

Resistance wise then ultimately we could finally get a test of the 8325 daily level as it aligns well with R2 at 8321 for today. Just prior to that is R1 at the 8289, which also coincides with a minor fib level. Not sure we will push past that 8325 but if we did then 8352 and 8369 are the next levels of note.

The 2h chart is actually bearish to start with so the bulls will need a decent break above the 8266 level and hold it, to try and get that more bullish for today and into tomorrow. The Raff channels also continue to head down though looking at the daily candles the FTSE100 is in a bit of consolidation at the moment with long tails and wicks.

The US market are certainly more optimistic currently and that will help to underpin the FTSE100. However, oil has dropped a bit weighing on Shell and BP and in turn, the FTSE100.

Not too much more to say, but let's see what the ECB do..... will they disappoint and not cut!?

Good luck today.

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