Technical analysis for FTSE 100 for 2nd September 2024
The UK's main stock index hit over a three-month high on Friday, clocking gains for the topsy-turvy month, with real estate shares in the lead as interest rate-cut hopes held firm, while energy shares tumbled on demand concerns, capping intra-day gains.
The blue-chip FTSE 100 index ended flat, but registered its second straight monthly gain and third consecutive weekly advance. The FTSE 250, which tracks mid-cap UK companies, rose by 0.3%, but declined over the past week and month.
The U.S. Personal Consumption Expenditure index, the Federal Reserve's preferred inflation gauge, rose 2.5% in July on an annual basis compared with an estimate of 2.6%, according to economists polled by Reuters.
Inflation in the euro zone fell to its lowest level in three years in August, setting the stage for a further cut in the European Central Bank's rates next month.
Asia & Overnight
Asian share markets got off to a quiet start on Monday as investors braced for a data-packed week culminating in a U.S. jobs report that could decide whether a rate cut expected this month will be regular or super-sized.
A holiday in the United States and Canada made for thin liquidity, while wins for far-right parties in German state elections added a fresh layer of political uncertainty.
The dollar was hanging on to gains made on Friday after upbeat spending figures led markets to trim the chance of a half-point easing from the Federal Reserve.
Futures are 100% priced for a cut of 25 basis points on Sept. 18, and imply a 33% probability of 50 basis points. They also have 100 basis points of cuts priced in by December, and 120 basis points for 2025.
Fed Governor Christopher Waller and NY Fed President John Williams happen to be speaking after the job data, giving the market a near-instant reaction.
Also important this week will be the ISM surveys, JOLTS job openings and ADP employment, trade and the Fed's Beige Book.
Oil prices lost more ground as the market pondered the prospect of increased supply from OPEC+ in October. Brent fell 42 cents to $76.51 a barrel, while U.S. crude lost 38 cents to $73.17 per barrel.
Those risks kept investors cautious with S&P 500 futures and Nasdaq futures little changed.
FTSE 100 technical analysis for today, 2nd September 2024
And boom, here's September..... New month money, more traders back from their holidays to take over from the summer juniors who will be remembered for a panic sell at the start of August! For today we may well see an initial dip and then a rise as the new month money flows in, and a rise to test to the 8450 area where we have the daily resistance level.
Initial resistance is from the red 30m coral at the 8398 level, along with the Hull MA here on the 2h, hence thinking that a drop down to the first support level at the S1 & 30m 200ema at 8367 looks likely.
The US market is closed today which may well temper volatility to a certain extent and the FTSE100 is more likely to drift higher instead.
If the bulls were to break the 8420 high from Friday then 8450 is the next one to watch and then above that keep an eye out for 8480 R3. Might be a tad optimistic to expect that today though.
If the bears were to break below the 8365 level then 8337 is S2 and daily support and the next level to try a long from, and should see a bounce. The seasonality for September is usually a rise and dip to play out over the month, and we may well see that again as rate cut expectation fuels an initial rise.
The S&P500 10d Raff channel is fairly level at the moment as you can see, whilst the 20d Raff heads upwards. A fairly tight range for the past 2 weeks of 100 points, between 5550 and 5650. Contrasted to the FTSE100 which has both Raffs heading up. Ergo the S&P500 may well try and push up initially this month too, and the bulls will be keen to break that 5650 level. That should help pull the FTSE100 up towards the 8650 level IMHO.
So keep an eye on 8400 initially, then 8450 for a reaction; 8365 for support.
Good luck today.
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