Technical analysis for FTSE 100 for 15th May 2024
London stocks rose on Tuesday, led by advances in the personal goods sector, while tightness in the labour market and strong wage growth had investors on edge about interest rate cuts.
The benchmark index FTSE 100 was up 0.2% after snapping a six-session winning streak on Monday. The midcap FTSE 250 index ended 0.3% higher.
Meanwhile, data showed on Tuesday that British wages grew more than expected, but other figures suggested the labour market was losing some of its inflationary heat, pushing money market participants to remain split on June rate cut bets.
Investor focus will now shift to a key inflation reading in the United States, due on Wednesday, to gauge the Federal Reserve's monetary policy path.
Asia
Asian stocks rose on Wednesday while the dollar drifted lower as traders weighed mixed U.S. producer price data and braced for the crucial consumer price report later in the day that is likely to influence the Federal Reserve's near-term policy path.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.38%, scaling a fresh 15-month high earlier in the session. Japan's Nikkei gained 0.58%.
Data overnight showed U.S. producer prices increased more than expected in April, indicating that inflation remained stubbornly high early in the second quarter.
Fed Chair Jerome Powell, speaking at a banking event in Amsterdam, called the PPI data "mixed" rather than "hot" because prior data was revised lower.
Investors have had to dial back their expectations of U.S. rate cuts this year due to sticky inflation and are now pricing in 43 basis points of easing this year, compared with 150 bps of easing anticipated at the start of 2024.
All eyes are now on Wednesday's U.S. consumer prices report, which is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the previous month, according to a Reuters poll.
Powell reiterated his message of caution over rate cut expectations although the Fed chief, along with Federal Reserve Bank of Cleveland President Loretta Mester, poured cold water over any rate hike thoughts, ING economists said.
In commodities, oil prices edged higher as large wildfires were threatening Canada's oil sands and as the market expected U.S. crude oil and gasoline inventories to show a drawdown later in the day. U.S. crude was up 0.4% at $82.71 per barrel and Brent was at $78.39 per barrel, up 0.5%.
FTSE 100 technical analysis for today, 15th May 2024
The 8400 level has been defended and that keeps alive the likelihood of the 8500 test, and possibly a bit higher towards 8515. The slight curve ball in the bulls plans today though may well be the US inflation news out at 1330, with a slight fall in April to 3.6% expected, from 3.8% previously. 3.4% YoY from 3.5% previously. Expect some volatility around this release, and we may well see a buy the rumour sell the news play out a bit for that.
Initial resistance this morning for the FTSE100 is at the 8488 level where have R2 and the key fib so we may well see any early rise and continuation from yesterday falter here, and a drop down to the key 2h support at the 8460 level. That said, I can also see a drop down to test the 8430 support area where have the 30m coral and also the daily pivot. If we do get a test of this then I would like to see a bounce here, and I am still expecting a test of the 8500 level before too long.
If the bears break below the 8430 level today then we will more than likely see a retest of the 8395 level and set up a double bottom there, but with the bottom of the 10d Raff channel (both Raff channels are still firmly heading up) at 8430 I would like to see that higher support hold and tee up a bounce.
Below 8395 then 8380 is the key fib, and then S2 just below that at 8373 but I am not expecting that low unless the 1330 news really spooks the bulls and boosts the bears!
Resistance wise, above the 8490 initial key level is the 8515 as mentioned, then 8528 above that. We may not get that high though, and with R3 here a stutter may well happen.
It's all remaining bullish for the moment and with the bounce yesterday the 2h chart is looking more positive again. Likewise for the S&P500 with the defence of the 5200 yesterday and a now bullish 2h chart with 5245 as support from the Hull MA on that.
So watching the 8430 level as support and 8490, 8515 as resistance for today.
Good luck.
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