Technical analysis for FTSE 100 for 25th July 2024
UK shares ended lower on Wednesday under pressure from weakness in luxury goods stocks and disappointing U.S. tech earnings, while Aston Martin surged after its half-yearly earnings update.
The blue-chip FTSE 100 index was down 0.2%, while the mid-cap FTSE 250 lost 0.7% to a near two-week low.
Quarterly earnings from U.S. megacap companies Alphabet and Tesla failed to impress investors, dampening risk appetite for investors globally.
In the UK, luxury group Burberry slipped 2% after the world's biggest luxury group LVMH's sales growth slowed in the second quarter.
U.S. inflation data, due Friday, will be watched to gauge the Federal Reserve's stance on interest rate cuts as the central bank's next policy decision edges closer.
The global equity sell-off looks set to extend into Europe on Thursday although the region may be spared the carnage in parts of Asia, where Japan's Nikkei tumbled as much as 3% and Hong Kong's Hang Seng slumped close to 2%.
Earnings this week from the likes of Alphabet and Tesla have not supported the market's sky-high tech valuations, sending not just mega-cap stocks but all of Wall Street sliding back to earth from near-record peaks.
Japan's exporter-heavy equity market was hit particularly hard by a reversal in the yen, which has rebounded to about 152 per dollar from a three-decade trough near 162 yen per dollar around the start of this month.
Meanwhile, ailing Chinese markets continue to take a beating. Beijing's latest surprise rate cut on Thursday only stoked worries about the economy, rather than shoring up sentiment.
The more muted performance of European stocks relative to Wall Street and Japan over the past couple months means there's less froth to come off the top, potentially leading to a shallower sell-off.
FTSE 100 technical analysis for today, 25th July 2024
The FTSE100 was quite resilient in the face of a bearish USA, with the AI bubble popping and tech leading the way down yesterday. As such the FTSE100 is looking like we will get a leg down today below the 8105 support, and also a test of the 8075 area. We have S2 and the key fib here, and as such, we could see bounce here if tested, albeit modest!
Below this area then 8045 is S3, and is also a break below the Raff channels as the bullish run for July fades away. The 2h chart has, as you would expect, gone bearish and has Hull MA resistance at the 8150 level, and having dropped off this line at 8170 yesterday, is the level that the bulls will need to break to reverse the sentiment. However, with resistance at the 8172 R1 level, along with 8170 being the now red 2h coral it remains strong resistance for today, and a short here is worth a go.
Initially we have 8108 also for a double bottom low with yesterday and the round number at 8100 so it will be interesting to see if this is defended early on.
If the bears were to break below 8045 today then 8000 would be the next level of significant, purely as its the round number and also a key one! I think that we may well see a bit of defence from the bulls today, even if it is just a dead cat bounce after yesterday sell off on the US markets.
Above the 8175 level, and this does look rather unlikely, then the 8190 key fib is next up, with the 8203 R2 above that. I don't expect it to get that high today but never say never!
The sell off has also coincided with gold putting in a buy signal on the daily chart at the 2375 level, so keep an eye on that for a rise and a flight to safety taking place.
On the news front the US data at 1330 will be closely watched, with durable goods orders and GDP growth rate - the latter forecasted to have kicked up to 2%.
Good luck today.
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