Technical analysis for FTSE 100 for 19th July 2024
British stocks rose on Thursday after a slew of positive corporate updates, while data showed UK wage growth slowed but not enough to seal expectations of an interest rate cut early next month.
The blue-chip FTSE 100 index closed 0.2% higher. Broadly, gains on the blue-chip index were driven by energy and consumer staple stocks.
Data showed that UK average weekly earnings excluding bonuses grew by 5.7% in a three-month period ended May, down from 6.0% in the three months to April, but remained close to double the rate that would be consistent with the Bank of England's 2% inflation target.
Money markets raised the odds of an interest rate cut by the BoE next month to 41.2% from 30%.
A weeklong decline in megacap tech stocks broadened to encompass smaller firms and financial shares as signs of economic weakness overwhelmed optimism over anticipated rate cuts. Almost every major group in the S&P 500 fell, with the benchmark down almost 1%. Conviction the Federal Reserve is poised to ease back on its battle to subdue inflation has prompted a retreat from megacap stocks, which emerged during the tightening cycle as a de-facto safety trade. In turn, money recently flowed to a broader swath of industrial and staples firms for which high financing costs posed a bigger impediment. The Russell 2000 fell about 2% after recently hitting its most-overbought level since 2017. Treasury 10-year yields rose four basis points to 4.20%. The euro dropped.
Asia & Overnight
Asian shares are set to end the week on a sour note, as uncertainty across major economies added to headwinds for investors even as the global rate easing cycle gets under way.
It has been a turbulent week in markets, with a tech sell-off sparked by deepening Sino-U.S. trade tensions, uncertainty over U.S. President Joe Biden's fate in the presidential race, disappointing Chinese economic data and a lacklustre third plenum outcome casting a shadow over the global mood.
In the foreign exchange market, Tokyo's recent bouts of intervention also kept traders on edge.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 1.56% and was headed for its worst week in three months with a nearly 3% loss.
Japan's Nikkei fell to a more than two-week low and was last down 0.09%, extending its sharp 2.4% fall from the previous session.
The Nikkei was on track to lose 2.7% for the week, also its steepest weekly decline in three months.
European shares looked set for a mixed start, with EUROSTOXX 50 futures up 0.08%, while FTSE futures fell 0.4%.
S&P 500 futures tacked on 0.16%, while Nasdaq futures gained 0.3%. In commodities, oil prices fell. Brent crude futures eased 0.46% to $84.72 a barrel, while U.S. crude futures slid 0.59% to $82.33 per barrel.
FTSE 100 technical analysis for today, 19th July 2024
The US weakness spread to the FTSE100 yesterday with the decline from 8270 playing out, which may roll into a bit more downside initially today. That said, the 8175 area has held well overnight so the bulls may well try for a rise towards the daily pivot and the 30m coral resistance at the 8200 area to start with.
This is also the 2h Hull MA resistance with that chart once again going bearish, so the bulls are on the back foot once again. The US weakness not helping them too much at the moment! We have also just dipped below the 2h coral line which make it appear more bearish.
Above the 8205 30m coral then the next key area of resistance is at the 8250 level where we have R1 and the key fib. Should we get this high today then we may well see a drop off from here, as we also have daily resistance at 8244. Being a Friday then some profit taking ahead of the weekend, and Biden possibly announcing that he is going to withdraw from the Presidential race may well see some reluctance to hold over the weekend.
Above 8250 though and then its R2 at 8315 really, though that feels like it will be a big ask for today.
Back to support and below the 8175 overnight support area, the 8140 level is the next main one with the key fib and S1 here. If we were to test this then a bounce here would make sense. A break of that would then target the 8092 S2 and with the round number here and daily support at 8105 we should see that get a bounce.
Not too much more to say really but as its Friday then be a little bit more risk off.
Good luck today and enjoy the weekend.
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