FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 has been led by miners and consumer staple stocks, while banks rose in anticipation of a second consecutive rate hike from the Bank of England meeting on Thursday. The blue-chip index was up 0.6pc to 7,583, extending gains for the second session.
The banking sub-index rose 0.9pc as expectations of an increase in rates by as much as 50-basis-points from the BoE pushed yields up on British bonds.
Among miners, Glencore and Rio Tinto were among the top gainers tracking stronger metal prices.
The rally in global stocks faltered Thursday following disappointing earnings from technology bellwethers and as traders await more clues on how quickly key central banks will tighten monetary policy.
U.S. equity futures dropped, with contracts on the technology-heavy Nasdaq 100 down some 2%, after Facebook parent Meta Platforms Inc. and streaming service Spotify Technology SA plunged in late trading on soggy forecasts.
Shares fell in Japan and Australia, while South Korea reopened from a holiday and pushed higher. Hong Kong and China remain shut. U.S. shares closed up Wednesday, taking global stocks to their best four-day advance since 2020, but the tech fallout overshadowed that winning run.
A strong regional inflation print is buttressing the euro and adding pressure on the European Central Bank to reconsider its dovish stance. Policy decisions from the ECB and the Bank of England are due Thursday.
Treasury yields dipped and a dollar gauge snapped a three-day retreat. Oil eased from a seven-year high and gold was steady at around $1,807 an ounce.
Shares in PayPal crashed by more than 25pc on Wednesday, knocking more than $50bn off its value after missing Wall Street growth forecasts. The payments company revealed worse-than-expected guidance for the start of the year and said it had deleted millions of illegitimate accounts. The drop means PayPal has joined the list of companies whose shares soared during the pandemic but have fallen to trade around where they were before coronavirus lockdowns.
Peloton, Netflix and Zoom have also given up much of their pandemic gains.
Equity Rally
The biggest four-day rally for U.S. stocks since November 2020 was overshadowed by disappointing tech earnings. Both Facebook’s parent Meta and Spotify plunged about 20% in late trading after reporting their quarterly results, and the biggest ETF that tracks the Nasdaq 100 tumbled as well. It’s been a volatile start to the year with investors swinging between concerns over Fed tightening and confidence in the economic recovery. In Asia, some markets, including in China and Hong Kong, remain closed for the Lunar New Year holiday.
Troop Movement
The U.S. gave the green light to move troops as it seeks to send a stronger military message alongside its diplomatic efforts with Russia over Ukraine. About 2,000 soldiers will travel from the U.S. to Europe in the coming days, while 1,000 troops based in Germany will be deployed in Romania, a Pentagon spokesman said, noting the moves are temporary. Russia quickly criticized the decision.
FTSE 100 live outlook prediction analysis for 3rd February 2022
The big event today is the Bank of England Rate news at midday, along with ECB as well at 12:45. The BoE are expected to hike rates by 50bps though 25bps may well be the likely scenario to take rates to 0.5%. Either way a hike is priced in and the FTSE100 has remained pretty buoyant anyway. We got the 7600 level yesterday and saw a decent drop later in the day, helped by the US selling off after the Facebook, PayPal and Spotify drops.
For today I am thinking that we may well get a rise towards the 7598 level again as we have R1 here, and also finally a red 30m coral at 7596. That has been green for a while now as we have steadily risen, so that changing to red could signal the start of a downtrend for a few sessions. The S&P is at the major confluence point with resistance at the 4590 area which got the reaction yesterday. Will is again today?
With the S&P drop yesterday the 2h chart has gone bearish with 4580 resistance on that for today so should we see a rise to this area then we may well dip here. That is also just above the R1 level of 4577. 4587 is the key fib above that. 4500 is support from the 2h coral.
Back to the FTSE100 and initial resistance as mentioned is at the 7600 area, and then above that we have yesterdays high at 7613. Should the bulls push on though then we still haven’t retested that 7638 recent high level and as such should we see that today we may well see the bears have a crack here. Higher up then 7700 is the next daily level of note, though I am not expecting us to get that today.
With the recent volatility the Raff channels have really widened out so we may well continue to see a bit of volatility play out during February.
For support on the FTSE100 7543 is the S1 level and also the green 2h coral and may well see a reaction. The bears didnt really push on yesterday but overnight the 2h chart has started to go a bit more bearish with 7583 resistance showing. If the bulls are on the back foot then we may well see the bears start to exert a bit more pressure, especially if the US bears start to drive the S&P500 down.
Below the 7540 level the 7527 is the key fib, and then a retest of 7492 below that.
It will really be about the BoE today and that may well drive us in one direction or the other – we may well see a bit of buy the rumour sell the news though I think an increase to 0.5% for interest rates is priced in.
So, could be an interesting one today. Good luck!
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