Technical analysis for FTSE 100 for 17th July 2024
London's benchmark FTSE 100 closed lower for a second straight session on Tuesday, hurt by fresh declines in Burberry shares as well as a drop in metal and oil stocks after commodities came under pressure from weaker-than-expected Chinese data.
The blue-chip FTSE 100 index ended down 0.2%, with luxury goods maker Burberry falling 5.3% following a 16% plunge on Monday when it warned on profit, scrapped its dividend and sacked its CEO.
Dampening the mood, energy and mining giants including Shell, Glencore and Rio Tinto dropped in the range of 0.9%-2.3%, after data showed China's economy grew much slower than expected in the second quarter.
Domestic consumer prices and producer prices data will be in focus on Wednesday, as the Bank of England's (BoE) next monetary policy decision inches closer. Markets are pricing in about 48% odds of a 25 bps rate cut in August. While inflation is near the BoE's 2% target, investors have been jittery due to hawkish comments from some policymakers and global political uncertainty.
Asia & Overnight
Gold hit a record and bonds rallied on Wednesday as markets prepared for global interest rates to fall, while stocks in Taiwan slipped after U.S. presidential candidate Donald Trump sounded lukewarm in his commitment to the island's defence.
The S&P 500 scaled record highs overnight and futures were steady in Asia. MSCI's broadest index of Asia-Pacific shares outside Japan was flat and Japan's Nikkei rose 0.1%.
Chinese stocks were subdued for a second day running. The Taiwan dollar slipped slightly to a two-week low. China's yuan steadied at 7.2676 per dollar.
Fed funds futures have fully priced a U.S. rate cut for September, followed by two more before the end of January 2025. Ten-year yields were steady at 4.175% and two-year yields hovered at 4.445%. Bond markets in Australia, Japan and South Korea rallied. Lower yields helped propel gold sharply higher overnight and through chart resistance around $2,450 per ounce despite a broadly firm dollar. It touched a record $2,478 in Asia trade on Wednesday.
Brent crude futures fell 13 cents to $83.60 a barrel and U.S. crude futures were also 13 cents lower at $80.63 a barrel.
British inflation data is due later in the day where focus will fall on services inflation, which is expected to run at a still-hot 5.6% in June from a year earlier.
FTSE 100 technical analysis for today, 17th July 2024
We got the bounce yesterday but from just above the 8107 support level, so that remains in play for the time being. As I am writing this, UK inflation held steady at the Bank of England’s 2% target for a second straight month in June, which has just made the FTSE complete arrow 1 already with the dip down to the 8170 initial support level.
This could be the low for the moment, as the bulls will be keen to build on yesterdays climb, and we have the green 30m coral to also lend support at the 8174 level. The 2h chart has also gone positive, just about though, with the Hull MA support at the 8197 level. The red coral will need to be broken at 8207 though if the bulls are going to push on today.
As the FTSE has spent the last several sessions being fairly constrained, the Raff channels have turned now, and are both heading down, but with the US strength currently it is helping to underpin the bulls. As per yesterday cable is dragging the FTSE100 as it's hovering around the 130 area.
Below the 8170 area then the bears would be looking at yesterday's low at the 8123 level again, and then 8107 below that. Should we see that lower support today than a long here is worth taking.
Resistance wise, if the bulls can break above the 8210 then I am looking for a rise towards the 8254 level, and a test of R2. Above that then Friday's high at 8278 and then the round number and R3 at 8305. Again, should it get that high then a short here is worth a go.
Now the UK inflation news is out of the way, attention will turn to the BoE and the interest rates and if a cut is looking likely sooner rather than later. I am sure the government would like a cut ASAP! We also have employment data out tomorrow (UK) and the ECB rate decision, with no change expected.
Good luck today.
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