FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 inched lower as gains in commodity stocks were offset by losses in retailers following a spike in January inflation. The blue-chip index ended 0.1pc lower at 7,603 with consumer staples leading losses. Data showed inflation hit a near 30-year high in January, supporting bets on a further rate rise to 0.75pc or 1pc by the Bank of England in March.
U.S. equity futures fell Thursday, Treasuries jumped and the dollar rallied in a bout of risk aversion amid geopolitical tension over Ukraine. Crude oil pared losses.
S&P 500, Nasdaq 100 and European contracts slid along with most Asian shares as traders evaluated a flurry of speculation about the situation in eastern Europe. Havens such as the yen and gold pushed higher. The 10-year Treasury U.S. yield sank below 2%.
Russian-backed separatists claimed Ukrainian forces violated cease-fire rules overnight in four places, according to a report from RIA Novosti, a Russian state news agency. The Luhansk separatist claim doesn’t mention any casualties. Allegations of cease-fire violations from both sides are frequent.
Earlier, the U.S. rejected Russia’s claims of a troop pullback from Ukraine’s border. The Kremlin has repeatedly denied any plans to invade its neighbour.
Oil, at one point down more than 3%, trimmed the retreat to some 1%. Crude had been hurt by the prospect of a resumption in official Iranian exports if talks lead to a nuclear accord. But it has also been whipsawed by supply worries stemming from the Russian troop buildup.
The latest gyrations show that “equities markets are still vulnerable to Ukraine-Russia related geopolitical risks,” said Lee Jaesun, an analyst at Hana Financial Investment Co.
Those concerns over Ukraine overshadowed the latest Fed minutes, in which officials concluded they would start raising rates soon and were on alert for persistent inflation that would justify faster tightening. There were few new details on balance-sheet runoff plans.
Investors expect at least 150 basis points of Fed tightening in 2022 — up from 75 basis points just a few weeks ago — to fight price pressures. The worry is whether the pivot away from pandemic-era stimulus will squeeze economic growth and inject more turbulence across assets.
Oil prices are back on the rise after suffering their biggest one-day loss this year as traders tried to weigh up tensions between Russia and Ukraine.
US officials said they hadn’t verified Russia’s claim it was pulling troops back from the border, while President Joe Biden warned an attack was still a possibility. This sparked renewed jitters about a potential war and reversed Tuesday’s sharp losses.
Benchmark Brent crude and West Texas Intermediate both pushed back towards recent seven-year highs, topping $95 and $95 a barrel respectively.
Not Convinced
While Russia insists it is serious about easing tensions with Ukraine, the West remains to be convinced. World leaders are refusing to take Russia’s announcement of a drawdown of forces on the border with Ukraine at face value. “There’s what Russia says and what Russia does, and we haven’t seen any pullback of its forces,” U.S. Secretary of State Antony Blinken said Wednesday. Meanwhile, Ukraine said it was the victim of an “unprecedented” cyberattack, aimed at paralyzing banks and government websites.
Raising Rates
Federal Reserve officials concluded in January that they would start raising interest rates soon and were on alert for persistent inflation that would justify a faster pace of tightening, according to minutes of their meeting. The minutes preceded data since then showing a roaring job market and a further jump in inflation. Investors see at least 150 basis points of tightening in 2022, up from 75 basis points just a few weeks ago. U.S. consumer prices rose to a four-decade high of 7.5% in January.
FTSE 100 live outlook prediction analysis for 17th February 2022
The bulls are hanging in there still on the FTSE100, despite the war and doom and gloom rhetoric, with the 7560 level proving decent support overnight. This is from the Hull moving average on the 2h currently and the line we longed off yesterday. Overnight the S&P500 has also managed to hold onto the 4460 support level and as such we could see an initial rise this morning.
That would likely get up towards the 7595 level where we have the daily pivot and the red 30m coral and could be an area that we once again see the bears have a go at. Above 7600 they will be looking to take this up to the key fib at 7642, and then we have the daily resistance above that at 7688 still remaining untested. The Raff channels are still heading up, and the top of the 10 day at 7710 is also showing as possible. Maybe we get that early next week if we still don’t have a Russian invasion of Ukraine.
For the bears they will be looking to break the 7560 support level as we have S1 here for today and its held overnight. Should they manage that then drop down to the 7523 S2 and 7513 daily support area looks likely. That is possible as the S&P500 has decent 2h support at 4422 and a drop down on that to then bounce from would fit well – and that may well pull the FTSE down a bit then back up if it were to play out.
Below 7513 then the recent low at 7485 would be the next level of note with 7450 below that. I am not expecting us to test these today though and have a slightly more bullish bias for today.
It certainly looks likely that we will get an initial climb towards the resistance levels anyway – 7600 and 4470 for the S&P the main ones to watch. 15423 for the Dax as well as we have the daily pivot and a red 30m coral here.
Talking of the Dax the 2h chart on that has support at 15265 which has held first thing this morning and could well play out with the climb to the pivot area.
FTSE 100 and the ball is in the bulls court still and they will need to break above the 7600 level really to keep things bullish. Seasonally we are heading into the bounce/bullish period of the month and it will be interesting to see if that plays out against the backdrop of news that is somewhat pessimistic at the moment. Rate rises, war, cost of living, retail spending, inflation and so on may well contain too much exuberance.
Good luck today.
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