FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 was weighed down yesterday by shares of consumer companies and industrial stocks, while improving employment conditions in the UK and rising US Treasury yields signalled growing bets of tighter monetary policies. The blue-chip index fell 0.6pc to 7,563, with Unilever dropping 4pc.
Oil prices climbed to their highest level since 2014 on Tuesday after a drone attack on production facilities in the United Arab Emirates raised fears of supply chain disruption. Brent futures traded in London hit $88.13 per barrel as the threat of new geopolitical tensions added to a strong rally driven by booming demand around the world.
Asian stocks and futures extended a global selloff Wednesday in the wake of a surge in Treasury yields, as the prospect of Federal Reserve monetary tightening to fight high inflation weighs on markets.
MSCI Inc.’s Asia-Pacific share index fell for a fifth session, led lower by a 3% slump in Japan. U.S. and European futures slid after the S&P 500 suffered a broad drop and the tech-heavy Nasdaq 100 sank.
The benchmark 10-year Treasury yield held a jump to 1.87%. Expectations are growing that it will top 2% amid speculation that the Fed may deliver more than a quarter-percentage point interest-rate hike in March. Bonds in Australia and New Zealand declined. A dollar gauge edged lower.
Oil extended a rally — underscoring global price pressures — after a pipeline running from Iraq to Turkey was hit by an explosion, taking out crucial supply.
In China, where policy is diverging from the U.S., the central bank has pledged to use more monetary policy tools to aid the economy and ease credit stress amid a real-estate slump.
PBOC Pledge
China’s central bank pledged to use more monetary policy tools to spur the economy and ease credit stress as signs of a property market slump worsen. The bank will roll out more policies to stabilize growth, front-load actions and make preemptive moves, said Deputy Governor Liu Guoqiang. The dovish comments came a day after the PBOC cut its policy interest rate for the first time in almost two years, signaling the beginning of an easing cycle.
FTSE 100 live outlook prediction analysis for 19th January 2022
The S&P500 continues to decline but the FTSE has been quite stubborn so far, staying above the 7500 level with the bulls managing to hang in there. As I write this it’s just testing the bottom of the 10d Raff channel at 7520 and we may well see a small rise off this to start with. However the ball is in the bears court and a drop down towards the 7500 level and also the 4540 level on the S&P looks likely.
Its possible that this is a pre-earnings shake out on the US markets, especially as the FTSE hasn’t really followed it down as steeply – if there is one thing the FTSE100 likes to do it’s slowly rise when the US climbs, but fall fast when the US drops and its not doing that this time. Cable dropping off though is helping to underpin for the time being (as lots of FTSE100 companies earn in $). We are also coming into the seasonal weakness mid-January that we have mentioned a few times. Once that starts it usually lasts until early March.
So, 7510 also looks key to start with as we have S1 and the key fib here to start with, so we could see a hold of that, especially if hitting that level coincides with the S&P hitting 4540. The bulls will be keen to defend there, as otherwise the 7422 daily support is the next key level on the radar. 7500 is also the bottom of the 20d Raff channel though and we haven’t had a test of that channel for a while now. Again, the bulls will likely want to defend this area. 7473 is S2 below that and should we overshoot the round number we will likely get this.
Upside is capped to start with by the daily pivot at the 7568 level and then 7590 for the Hull MA on the 2h chart. Should we get to that level then a short there is worth taking, as we may well see the coral go red too and that is at 7583. So decent resistance there.
7606 is R1 above that though pushing much past 7600 today feels like a big ask currently. The S&P still looks weak, with the daily resistance now firmly locked in and the 25ema on the daily at 4678, though closer in 4580 is 30m resistance, and then 4610, and 4650.
So, looking at possibly a hold of the 7500 level today and a bit of a rise towards 7590. News flow remains pretty negative, CPI inflation has just come in at 5.4% – the highest since 1992 to further enhance the cost of living squeeze.
Boris is also on the ropes at the moment with MPs rebelling – can he survive and if not then will we see Rishi swoop in?
Another interesting day ahead. Stay nimble and watch for 7550 and 7590 resistance, 7510 and 7473 for support. Good luck today.
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