Technical analysis for FTSE 100 for 25th March 2024
The FTSE 100 closed at its highest level in a year on Friday as investors continued to cheer the dovish tilt in the Bank of England's monetary policy, while insurer Phoenix Group notched its best day in four years after issuing an upbeat forecast.
The blue-chip FTSE 100 rose 0.6% to clinch its second straight week of gains, powered by a near 2% rise on Thursday after the BoE said the economy is moving in the direction for interest rate cuts.
Meanwhile, the pound fell to its lowest in a month after data showed UK consumer spending stagnated in February and BoE Governor Andrew Bailey said rate cuts were in play this year, boosting dollar-earners.
European shares paused near record highs on Friday with British, German and Italian stocks outperforming regional peers following a slate of dovish cues from major central banks this week. Adding to the upbeat mood, European Central Bank head Christine Lagarde told European Union leaders gathered in Brussels the eurozone's inflation rate is set to keep on falling, while economic growth will start picking up this year.
EUROSTOXX 50 futures have barely budged, while FTSE futures fell 0.14%.
Asia
Asian shares dithered on Monday as investors worried U.S. inflation data this week could derail the outlook for lower interest rates, while the risk of currency intervention from Japan stalled the yen's decline for the moment.
China's central bank also engineered a rally in the yuan after setting a firmer fix for the currency, nudging the dollar lower more broadly.
The main data event of the week will be U.S. core personal consumption expenditure (PCE) price index on Friday which is seen rising 0.3% in February, keeping the annual pace at 2.8%. Anything higher would be taken as a setback to hopes for a Federal Reserve rate cut in June.
Many markets are closed for Easter on Friday, when the PCE data is due for release, so the full reaction will have to wait until next week.
Fed Chair Jerome Powell was sufficiently dovish last week to leave futures implying around a 74% chance of a June easing, up from 55% a week earlier.
Powell will participate in a moderated discussion at a policy conference on Friday, while Fed governors Lisa Cook and Christopher Waller are also appearing this week.
Europe has its own inflation tests with consumer price data out from France, Italy, Belgium and Spain, ahead of the overall EU CPI report on April 3.
Sweden's central bank meets on Wednesday and is generally expected to keep rates at 4.0%, though a surprise easing by the Swiss National Bank (SNB) last week has markets anticipating a dovish statement.
Expectations for falling borrowing costs globally have been a boon for equities, with the S&P 500 up almost 10% for the year to date. On Monday, S&P 500 futures and Nasdaq futures slipped 0.1% each.
FTSE 100 technical analysis for today, 25th March 2024
The strong climb on Friday that saw a test of the 7963 level has retraced ahead of today's session and it looks like we may well see some more downside today for a dip and rise to play out today. The 2h chart remains bullish with the Hull MA support at 7900 to start with today and as that lines up nicely with the round number, we may see any early slide bounce a bit here.
Ultimately we may well see a drop down the 7840 area where we have a cluster of decent looking supports, and as such I would like to see this set up a decent bounce. The overall big picture trend remains bullish with the Raff channels all heading up across the board still, so buying the dips remains the preferred bias at the moment.
Support wise and splitting the 7840 and 7900 levels is S1 at 7880.
Resistance wise, then the top of the Raff channels are both around the 7980 level and splitting R1 (7967) and R2 (8009), along with the key psychological 8000 level.
We are within spitting distance of this so ultimately we will see a test of this 8000 level soon I expect, and we remain on track for the 8300 area at some point this year.
To start with the 30m coral and key fib are resistance at the 7945 level and an early stall here and then a leg down would fit well. Above this then R1 would be next up. The bulls are slightly on the back foot to start with given the drop from Friday's high so a dip and rise would work well.
The main news event will be Largarde's speech at 10am which may have an effect on the Dax40.
Interestingly the S&P500 2h chart is bearish to start the week with key resistance at 5252 but has coral support at 5220 so there is potential for a break one way or the other shortly. Again, a dip and rise would fit well on that and a break north would make sense.
Good luck today
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