Technical analysis for FTSE 100 for 2nd May 2024
The FTSE 100 slipped on Wednesday, led by declines in energy stocks, while investors grew cautious ahead of the U.S. Federal Reserve's policy decision later in the day, hoping for hints on its interest rate path. The blue-chip index closed down 0.3%, while the mid-cap FTSE 250 ended off 0.2%
Heavyweight oil and gas shares slipped 1.7% as oil prices fell over 2% to a seven-week low, weighed down by a surprise build in U.S. crude stocks, the prospect of a Middle East ceasefire agreement and persistent U.S. inflation.
British manufacturing fell back into contraction in April and cost pressures escalated, though the pace of decline was a little less marked than first feared, a survey showed.
A gauge of global stocks fell on Wednesday while the dollar dipped against a basket of peers after the Federal Reserve left interest rates unchanged and indicated it is still leaning toward eventual rate cuts and after a batch of U.S. economic data.
But the Fed put a red flag on recent disappointing inflation readings and suggested a possible stall in the movement toward more balance in the economy.
The central bank also announced plans to slow the speed of its balance sheet drawdown, after having spent much of the earlier part of the year warning of such a shift.
The Dow Jones Industrial Average rose 172.78 points, or 0.46%, to 37,986.53, the S&P 500 lost 3.66 points, or 0.07%, to 5,032.03, and the Nasdaq Composite gained 0.38 points, or 0.00%, to 15,658.20.
Earlier, data from the ADP Employment report showed U.S. private payrolls increased more than expected in April while data for the prior month was revised higher. But a separate report from the Bureau of Labor Statistics in its Job Openings and Labor Turnover Survey, or JOLTS, showed U.S. job openings fell to a three-year low in March, while the number of people quitting their jobs declined, indications of easing labor market conditions that could potentially aid the Fed in its fight against inflation.
Other data from the Institute for Supply Management pointed to continued sluggishness in U.S. manufacturing, which contracted in April amid a decline in orders after briefly expanding in the prior month. The data comes ahead of the government's key employment report on Friday.
Asia
Asian stocks and U.S. futures rose on Thursday after the Federal Reserve downplayed risks of an interest rate hike, while the yen was bumpy after another burst of suspected intervention from Japan.
Shortly after Fed Chair Jerome Powell had finished telling reporters the Fed may have to leave rates elevated, the yen surged against the dollar.
It was the second sudden leap in the ailing Japanese currency this week and markets have assumed it is authorities stepping in as yen-buyers. The yen traded as strong as 153 to the dollar before sliding back to around 156 in Asia.
S&P 500 futures rose 0.5%, pointing to the cash market recouping a late slide on Wall Street. MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.6%, led by a 2% surge in Hong Kong. Tokyo's Nikkei was flat.
Oil was nursing a heavy fall on demand worries and a surprise jump in U.S. stockpiles. Brent crude futures were up 30 cents a barrel to $83.74, after touching a seven-week low of $83.29 on Thursday. U.S. crude was at $79.31 a barrel
FTSE 100 technical analysis for today, 2nd May 2024
Not really much of a surprise that rates will stay higher for longer, however the bulls fought it well yesterday with the climb from the 5010 S&P500 level, which also helped pull the FTSE100 away from the 8100 level. As such, that keeps hopes alive of a further test of the 8200 level and 8205 daily level. If we see that today then we may well see yet another dip off that.
If the bulls manage to break 8200 with some conviction though, then a rise towards the 8246 R3 level may well play out though to be honest that feels a big ask today. Worth noting that we also have NFP data out tomorrow so a bit of caution ahead of that today may well be the order of the day.
An initial drop down towards the 8130 level looks likely, with the daily pivot and the now green 30m coral here. A bounce here would fit the charts well and tee up a climb to the red 2h coral line at 8175, possibly the 8200 level.
Below the 8123 level then yesterday's low at 8100 for a double bottom bounce, though below this then the 8083 S1 level would likely be seen. Again, not sure it will get that low today as the bulls will be buoyed by the bounce they managed yesterday and will also be keen to keep the momentum going. That said they are slightly on the back foot as the various 2h charts are bearish at the moment.
The Raff channels continue to head up as well and we have the bottom of the 10d channel aligning with S3 at 8000 currently. Doubt we will see that today though! However, it does confirm the "buy the dip" bullish sentiment still.
We may well be on for a range day between 8120 and 8200 today, likewise with the S&P500 5021 and 5090. A bit of consolidation as well after the FOMC, and ahead of NFP.
Not too much more to say really..... good luck today!
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