Technical analysis for FTSE 100 for 9th October 2024
Britain's benchmark FTSE 100 recorded its worst day in two months on Tuesday led by losses in miners after China refrained from specifying measures to stimulate its economy, while homebuilder Vistry dropped after cutting its annual profit outlook.
The blue-chip index FTSE 100 dropped 1.4%, hitting a one-month low, while the midcap index FTSE 250 fell 1.1%.
Most sectors in the FTSE 350 were trading in the red, driven by industrial metal miners that slipped over 5% as prices of base metals fell after initial optimism over top consumer China's stimulus measures faded.
Chinese officials disappointed markets by providing few details on plans to bolster China's slowing economy.
Other sectors such as banks and energy also saw heavy selling pressure, with the latter down 2.7%, tracking lower oil prices.
The world’s largest tech companies drove the S&P 500 higher Tuesday, with the US stock market rebounding from its worst session in a month. Equities closed within a striking distance of their all-time highs, with the S&P 500 up 1% and chipmaker Nvidia leading gains. Yet while the tech sector rallied, energy stocks fell along with oil and US-listed Chinese stocks tumbled as the government in Beijing stopped short of launching more major stimulus. Wall Street’s favorite volatility gauge — the VIX — dropped from its highest since August.
Asia & Overnight
Gravity brought China's soaring stock market back to earth with a thud on Wednesday. Disappointment about the lack - so far - of follow-through on stimulus promises has triggered a pullback in a spectacular rally and could be a harbinger of further weakness in China-exposed assets trading in London and Europe.
Chinese shares fell on Wednesday and commodities nursed sharp losses as investors tempered enthusiasm for a Chinese economic recovery, while broader markets steadied on expectations that the U.S. economy can avoid recession and support global demand.
At the time of writing, the Shanghai Composite was down more than 5% and headed for its largest slump since the pandemic collapse of February 2020. A bounce in Hong Kong was quickly snuffed out. Metals and other commodities were on the slide along with China proxies such as the Australian dollar.
China volatility already pulled down European miners and luxury stocks on Tuesday but further drops in the iron ore price and selling of Rio Tinto and BHP shares in Sydney suggest more pressure ahead.
Minutes for September's Federal Reserve meeting are due later in the session, though they may not add much since Fed officials have been out in force in recent days pointing out last week's strong jobs reading is positive for the economy.
Brent crude futures , which fell 4.6% overnight, steadied at $77.79 a barrel. Iron ore found support at $106 in Singapore after a 5% slide on Tuesday.
U.S. equity futures were broadly steady in Asia, following solid gains in cash trade overnight as a handful of Federal Reserve officials sounded positive about the prospects of managing interest rate levels for a soft economic landing.
Influential New York Fed President John Williams told the Financial Times that last week's unexpectedly strong jobs report for September showed the economy was healthy, while falling inflation left room for rates to be lowered over time.
FTSE 100 technical analysis for today, 9th October 2024
Well after the bear Tuesday will we see a dead cat bounce today... the bulls have fought back from the 8180 level which was the bottom of the 20 day Raff channel for yesterday and the price has stumbled back above the 8200 level. For today I am thinking that we may well see an initial rise towards the 8255 level for a test of the 200ema on the 30min, though there is stronger resistance just above this at the R1 and key fib at 8285.
As such, should we see this level then a short here is worth a go as that would be a good profit point for the 8180 longs being 100 points.
That said, the 2h chart is bearish (as you would expect!) to start with today, and the Hull MA has 8250 resistance on that, with 8270 the now red coral line. The bulls will certainly have their work cut out today if they are to break this upper area at 8285. If they do so then the next levels in play remain the 8330 area which is the recent high with 8360 R2 above.
For the bears they will be looking to break below the 8200 intially, with a test of the 8180 below that as yesterdays low. If they did so then the next key support is the 8155 which is the new 20d Raff channel bottom, though a break of this would likely lead down to the 8120 support level after that.
Generally today I am thinking that we ay well see some more buy the dippers appear though. If we did see 8155 then a long here is worth a go.
The main news event is the Fed minutes at 1900 but most will be looking ahead to jobs and CPI data tomorrow in the USA, and UK GDP on Friday - with a slight uptick forecasted on that.
Good luck today.
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