Quote from Nick on 2nd March 2022, 9:37 am

FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The FTSE 100 fell yesterday as the worsening Ukraine crisis pushed shares of heavyweight banking and Russia-exposed miners lower, while Flutter Entertainment dropped on downbeat earnings. The blue-chip index ended 1.7pc lower at 7,330, with HSBC , Prudential, Lloyds Banking Group and Barclays among the biggest drags.

Grocery price inflation hit 4.3pc in February, according to data from Kantar, as it warned further pain was likely owing to the potential impact of the conflict in Ukraine.

Stocks extended a selloff Wednesday as the war in Ukraine and sanctions on Russia triggered a record-setting surge in commodities, darkening the economic outlook and bolstering demand for sovereign bonds.

An Asian equity index shed about 1%, sapped by Japan, while European futures wavered and U.S. contracts edged up. Caution remained evident after a Wall Street slide spurred by the prospect of slowing growth alongside high inflation.

Demand for havens buttressed a global fixed-income rally, with the U.S. 10-year Treasury yield at about 1.72% and the Australian equivalent declining 11 basis points. Gold eased but stayed near a 13-month high. The dollar was firm.

Russia’s invasion of Ukraine imperils flows of crops, energy and metals. The two account for more than a quarter of the global grains trade, and Russia is additionally rich in oil and gas. Wheat hit a 14-year high, Brent oil was near $110 a barrel and a commodity index jumped the most since 2009 to a record.

Economic risks are tempering expectations for how steeply the Federal Reserve will raise interest rates. Markets have priced out any risk of a half-point March liftoff. Traders in the U.K. and Europe have also dialed back rate-hike bets. The challenge for central banks is to contain inflation without choking growth.

Switching Tactics
Russia’s invasion of Ukraine is entering a new phase, promising a more deadly time ahead for the country, according to Western military officials. Early signs are that Russian commanders are switching from lightning strikes — to force their way into cities they assumed would be half-heartedly defended — to more traditional, artillery-based attacks and a renewed focus on assaulting the capital, Kyiv. As the invasion intensifies, the list of foreign companies pulling out of Russia keeps on growing, and a Chinese think tank says sanctions imposed upon Russia will backfire.

Commodities Jump
Stocks are set to come under more pressure as the war in Ukraine and sanctions on Russia stoke the cost of commodities. Futures for Japan, Australia and Hong Kong fell after Wall Street and European shares retreated. Australian debt joined a global rally in fixed income that lowered the 10-year U.S. Treasury yield to 1.73%. Gold and the dollar advanced, while crude soared as steps to tap reserves failed to ease worries about shortfalls.

FTSE 100 live outlook prediction analysis for 2nd March 2022

Its ramping up unfortunately as Russia moves into just heavy shelling of Ukraine rather than the lightning strikes they thought it was going to take to capture Ukraine. Theres also the rumour that they may have Moldova in their sights too after Ukraine. Biden ramped up the rhetoric yesterday in his State of the Union address calling Putin a dictator. Either way its all looking a bit dicey and getting worse. Oil has hit $110 now as well, with gas prices also rising just as the average UK resident is about to be hit by rising costs across the board come April as energy price gaps are lifted and NI is raised.

So what's in store for today..... Volatility certainly! Initially we have bearish 2h charts on all markets and the FTSE resistance level is at 7355. The bulls would need to push above that for a test of the 7415 key fib level though the daily chart remains bearish so shorting the rallies is still the play for the moment. That was a bit sneaky yesterday taking it to nearly 7500 on a bit of a stop hunt before that larger drop. Nice bounce off the 7350 though in the afternoon, so some brave bulls still around off key levels. Definitley pays to take some profits quickly and get stops to breakeven asap.

Above the 7415 level then 7466 is R1 and could be seen, though with the backdrop markets are nervous as you would expect.

Support wise, 7300 initially is the key fib and there is a bit of weaker support higher up form the 25ema on the 30m at 7342. Below 7300 then the 7240 is S1, with 7225 the daily 200ema below that. That would be yet another test of that in the past week and the more its tested the more chance it has of breaking. Below that then is 7175 for daily support and 7128 for the 20d Raff. 7096 is the 10 day Raff. Whilst these levels seem a long way away if Ukraine falls then we may well see markets panic sell.

It's tricky conditions for trading so do stay nimble and cautious. Generally it all looks weak (stating the obvious).

Not too much more to say really. Watch 7300 then 7225 for support, 7415 and 7466 for resistance today. Good luck.

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