FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 closed positively yesterday even though uncertainty surrounding the war in Ukraine continues to weigh on global markets. London’s main index added 0.7% to 7,613 at the end of the trading day, with gains led by utilities National Grid, SSE and United Utilities.
Stocks and bonds declined Wednesday on the prospect of a swift reduction in the Federal Reserve’s debt holdings as part of a stepped up campaign of monetary tightening to tackle high inflation.
An Asia-Pacific share index fell over 1%, dragged down by Japan and Hong Kong as the latter reopened after a holiday. U.S and European futures wavered, following a drop in Wall Street shares led by the technology sector.
Treasuries extended a slump, pushing the 10-year yield past 2.60% to the highest level since 2019. Bonds in Australia and New Zealand also tumbled. A gauge of the dollar’s strength was near a three-week peak.
Fed Governor Lael Brainard said Tuesday curbing inflation is “paramount,” adding the central bank may start trimming its balance sheet rapidly as soon as May. Investors fear that a more restrictive U.S. central bank could end up tipping the world’s largest economy into a downturn, or even a recession.
Oil was steady at about $102 a barrel. Worries remain that Russia’s growing isolation over the war in Ukraine may further disrupt commodity flows. Fresh sanctions on Russia are expected, including a U.S. ban on investment in the country and a European Union proscription on coal imports.
Brainard’s comments put the spotlight even more firmly on the Fed meeting minutes due later Wednesday, which are expected to provide clues about the pace of both interest-rate hikes and so-called quantitative tightening, the process of shrinking the central bank’s bond holdings.
Fresh Sanctions
Russia is facing a fresh round of sanctions after the discovery of civilian murders and other atrocities committed in Ukrainian towns sparked global outrage. The sanctions under discussion include a U.S. ban on investment in the country, an EU ban on coal imports and increased penalties on financial institutions. Putin’s daughters, political figures and tycoons could also be targeted. Meanwhile, Asia’s tourists hotspots are missing their big-spending Russian guests; and Chanel is refusing to sell bags to Russians who plan to take them into their country.
Rapid Reduction
Federal Reserve Governor Lael Brainard called the task of reducing inflation pressures “paramount” and said the central bank will raise interest rates steadily while starting balance sheet reduction as soon as next month. Her comments suggest she is somewhere near the median estimate of seven rate increases this year, but also prepared to go faster if inflation doesn’t subside.
FTSE 100 live outlook prediction analysis for 6th April 2022
As I expect you know we have the Fed minutes at 7pm this evening which will give further clues as the Fed’s intentions with regards to monetary tightening. As such we could see a fairly static day ahead of that. Initially though I am thinking that we will get a rise to have another test of the daily resistance level at 7620. The support is quite decent on the 30m chart to start with at the 7580 area as we have the daily pivot and the 30m coral (green) here.
If we do get a rise to 7620 again (and we got a decent reaction off this yesterday) then we could see a drop down to the 7550 level where we have S1 and the 30m 200ema just above.
Above the 7620 level then the bulls will be looking to target the 7667 R2 level and ultimately the 7730 daily resistance level. The Raff channels are still heading up, and the bottom of the 10d is at 7536 – so should we get a drop to this area then we should in theory see it hold. The 20d channel is also still heading up.
If the bears were to break below the 7535 level though then a test of the 7500 and possibly the 25ema on the daily at 7456 would be on the cards. It would be the first test of the 25ema on the daily since it went bullish so in theory a decent swing long place to enter. I don’t think we will drop that low today though.
S&P500
Dropped off the 4590 level well yesterday and has 30m resistance to start with at the 4545 level with a red coral and daily pivot here. If we get an initial rise to here then we may well see the bears appear to try and go for the 4498 S1 level and tying in with the round number support. With the Fed in play today we may well see a bit more hesitance and some consolidation before resuming the uptrend. Seasonally the S&P gets bullish in April.
The bulls will be keen to break 4550 (and we have the Hull MA resistance on the 2h here) as they can then drive it up towards 4600 again, and a push past that to target R2 at 4625 or higher.
Dax40
An initial rise on the Dax to the daily pivot resistance at the 14442 level would make sense though we have 2h resistance at the 14410 level to start with from the Hull MA. We may well see a drop down to the S1 level at 14278 play out this morning though.
Summary
The 2h charts for the Dax and the S&P are bearish to start with so watch the 14410 and 4548 levels for a reaction first thing. I think we may well see a rise dip rise play out again today. The 2h FTSE is bullish though and 7570 is support on that. FTSE100 being helped by the miners and O&G still.
Good luck today.
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