Technical analysis for FTSE 100 for 6th September 2024
Britain's benchmark FTSE 100 stock index ended lower on Thursday, weighed by a decline in pharma shares, while a handful of stocks traded ex-dividend, adding to losses.
The blue-chip index closed down 0.3%, falling for the fifth consecutive session for the first time since May. The domestically-focused mid-cap FTSE 250 index lost 0.2%, after touching a nearly one-month low on Wednesday.
On the data front, growth in Britain's construction industry slowed in August despite the biggest pickup in homebuilding in nearly two years, adding to signs of easing inflation pressures. British companies expect to raise selling prices by the smallest amount in nearly three years but wage growth shows no sign of cooling, another survey showed.
Asia & Overnight
Asian shares clung to tight ranges and the dollar nursed losses on Friday, with investors on tenterhooks ahead of U.S. jobs data that could decide the size and speed of coming rate cuts in the world's largest economy.
As of now, oil prices are staring down their worst week in more than a year to hover just above a critical chart level, with their near-term fate depending on the payrolls report due later in the day.
MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.2% higher, having fallen 2.3% so far this week. The Nikkei slipped 0.1% to be down 3.9% for the week. China's sharemarkets opened mixed, while Hong Kong's Hang Seng was flat.
The nervous markets, however, knocked the Nasdaq futures down 0.6% while S&P futures slipped 0.3%.
NFP
There is a lot riding on the U.S. non-farm payrolls report after the Federal Reserve Chair Jerome Powell said policymakers do not welcome any further weakening in the labour market, laying the ground for a September rate cut.
Analysts are looking for a rise of 165,000 in new jobs and a dip in the unemployment rate to 4.2%.
However, risks are now to the downside after soft job openings and fewer job gains in the private sector led markets to ramp up the chance of a half-point cut from the Fed to 42% this month.
FTSE 100 technical analysis for today, 6th September 2024
Today is NFP news at 1330 and the markets have been on tenterhooks this week ahead of that, as it will give more clue on the imminent rate cuts or not. The forecast is 164k, up from 114k previously, while unemployment is forecast to have dropped 0.1% to 4.2%. They will come after a private report from ADP on Thursday showed the US added the fewest jobs since 2021. The payrolls data will help determine whether the Fed can lower borrowing costs by a quarter-point this month — or deliver a larger, half-point reduction.. Ahead of the report, traders are fully pricing a smaller cut but continue to see some chance of a bigger move.
Initially today we may well see another test of the 8200 area and with S1 aligning with the previous low at 8204 we may well then see a bounce here. The bulls will be keen to defend the 8200 level, along with daily support at 8190 and the key fib at 8186.
A break of 8186 and the bears may well then be looking to drive it down to the 8133 S3 area, along with the next daily support level at 8120. However, we may well see a bit more optimism today, and a rise toward the 8280 resistance area play out instead.
That would double top with yesterdays high as well, and we also have the R1, 200ema and just below the key fib all in this area. As such, we could see a rise to this ahead of the news (buy the rumour, sell the news) and then a pull back from here.
If the bulls do go for it today then a test of the 8300 and possibly even 8316 R2 may well play out.
It all hinges on NFP though! So, keep an eye on 8200 for support, 8285 and 8316 for resistance.
Good luck today and have a great weekend.
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