Technical analysis for FTSE 100 for 4th October 2024
The UK's benchmark FTSE 100 edged lower on Thursday, with losses in mining shares offsetting another strong day for energy companies, while Britain's biggest supermarket group Tesco climbed after raising its annual profit forecast.
The blue-chip FTSE 100 index was down 0.1% while the mid-cap index FTSE 250 eased 0.2%. Heavyweight mining shares lost ground, with indexes tracking industrial miners and precious metal miners down 1.2% and 0.3%, respectively.
Prices of industrial metals like copper slipped on worries about ongoing conflict in the Middle East, a stronger U.S. dollar and some uncertainty about the demand impact of stimulus measures in China
Gold also lost ground as the dollar strengthened as markets reassesed the likelihood of another 50 basis point Federal Reserve rate cut.
Oil and gas shares jumped 1.4%, extending gains for a fifth consecutive session, as crude prices rose on expectations that a widening Middle East conflict could disrupt supply.
Meanwhile, Bank of England Governor Andrew Bailey said there was a chance the central bank could move more quickly to cut interest rates if there is further good news on inflation. Rate sensitive homebuilding stocks rose 1.3% after his comments.
The S&P Global UK Services Purchasing Managers Index dropped to 52.4 in September, from 53.7 in August, with prices charged rising at the slowest pace in almost four years. Inflation in the services sector is closely watched by the BoE.
Asia & Overnight
Asian stocks retreated on Friday while oil prices headed for their sharpest weekly gain in more than a year, as escalating tensions in the Middle East kept markets on edge ahead of a U.S. jobs report later in the day.
U.S. President Joe Biden said on Thursday that the U.S. is discussing strikes on Iran's oil facilities as retaliation for Tehran's missile attack on Israel, while Israel's military hit Beirut with new air strikes in its battle against Lebanese armed group Hezbollah.
His comments sparked a surge in oil prices, which had already been on the rise this week following the widening conflict in the Middle East.
Brent crude futures eased 0.04% to $77.59 a barrel on Friday but were headed for a weekly gain of about 7.8%, the largest since February 2023. U.S. West Texas Intermediate (WTI) crude futures steadied at $73.71 per barrel and were on track to advance 8.1% for the week, the most since March 2023.
The air of caution in turn left most equities in the red on Friday. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.32% and was set to end the week little changed.
Australian shares fell 1%, while stock futures extended their declines from the previous session.
S&P 500 futures and Nasdaq futures eased 0.03% each, while EUROSTOXX 50 futures were flat.
Japan's Nikkei also reversed early gains to last trade 0.08% lower. It was headed for a weekly loss of more than 3%.
Key developments that could influence markets on Friday:
- U.S. nonfarm payrolls report (September)
- Bank of England's Huw Pill speaks
- Speeches from various European Central Bank policymakers
FTSE 100 technical analysis for today, 4th October 2024
Given the backdrop the FTSE100 has held on quite well, helped by energy stocks and a strengthening dollar mainly. The Bulls will be looking to break above the daily pivot level at 8286 today, as that would lead to yet another test of the 8320 area which has been very strong resistance on several occasions now. That also links in with R1 at 8327 for today, and 8333 for daily resistance. As such a short here is worth taking once again.
If the bulls were to break above this today, and I am more inclined to see some caution today ahead of the weekend, and in light of possible Middle East escalation over the next 72 hours so reducing buying appetite, then 8367 is the next level to keep an eye on.
For today I am more inclined to go for a drop down to test the 8235 level initially, where we have S1 and the key fib, along with 8226 daily support. A bounce off this back to the pivot, and then some more downside as the NFP news comes out at 1330 would make sense.
The BoE chatter about more aggressive rate cuts has also helped underpin things. I am still expecting them to be aiming for a steady interest rate around the 3.5/4% mark ultimately and hold it there for a while.
If the bears were to break below the 8230 level then S2 at 8197 and linking in with the round number is the next one to look for.
NFP is out at 1330 with a forecasted rise to 147k from 142k previously. Unemployment rate for September is also out and no change forecasted with 4.2% expected. Expect volatility at that time though.
Not too much more to say really... keep an eye on the levels in the table and good luck today. Have a great weekend as well!
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