Technical analysis for FTSE 100 for 2nd October 2024
Oil prices jumped and stocks tumbled on Tuesday after Iran fired an estimated 180 missiles at Israel in retaliation for the ground invasion of southern Lebanon.
Brent crude jumped by as much as 4pc to above $74 a barrel following a warning from White House officials that a strike was imminent. It rose further, topping $75 a barrel, after Tehran launched a volley of missiles at Israel shortly before 6pm London time.
Elsewhere, global stocks tumbled and the price of gold spiked on concerns about wider escalation in the region.
The pan-European Stoxx 600 index closed down 0.4pc, while the S&P 500 dropped 0.9pc on Wall Street.
Gold jumped by as much as 1.3pc to $2,673 per troy ounce, near its record high. The Israeli Shekel fell 1.1pc against the dollar.
The FTSE 100 was one of the few global stock indexes to register gains, buoyed by defence and oil stocks. BAE Systems, BP and Shell were all among the day’s biggest gainers.
Asia & Overnight
Asia stocks sank on Wednesday, catching up with the sell-off on Wall Street after Iran's ballistic missile strike on Israel provoked fears of a wider regional conflict, while crude oil pushed higher on the risk of supply disruptions.
Investors flocked to safer assets, pushing U.S. Treasury bond yields down in Asian time, while gold hovered near an all-time high.
The safe-haven dollar traded close to its strongest in three weeks versus the euro. Macroeconomics also buoyed the dollar, with a resilient U.S. job market arguing for a smaller Federal Reserve interest-rate cut in November, and euro zone inflation trends backing a European Central Bank easing this month.
Japan's Nikkei slumped 1.5% as of 0022 GMT, while South Korea's KOSPI dropped 1.3% and Australia's benchmark lost 0.3%. MSCI's broadest index of Asia-Pacific shares slipped about 0.5%.
Hong Kong's Hang Seng had yet to open after a holiday on Tuesday. Mainland Chinese markets are shut for the week-long Golden Week holiday. Trading in Taiwan was suspended due to a typhoon.
U.S. S&P 500 stock index futures weakened 0.16%, after the cash index lost 0.9% overnight.
Euro area data on Tuesday showed inflation fell below the ECB's 2% target last month, bolstering bets for a quarter-point rate cut on Oct. 17.
Meanwhile, U.S. figures overnight showed a solid economy, a day after Fed Chair Jerome Powell pushed back against the likelihood of another 50 basis point rate cut when the U.S. central bank meets next month.
Job openings unexpectedly increased in August after two straight monthly decreases, but hiring was soft and consistent with a slowing labour market. Private payrolls data is due later on Wednesday, ahead of potentially crucial monthly non-farm payrolls numbers on Friday.
FTSE 100 technical analysis for today, 2nd October 2024
Despite the FTSE100 holding on well yesterday and another test of the 8300 level overnight it looks like we will get an initial dip down toward the 8250 support area again to start with. We have the bottom of both the Raff channels in this area now so in theory we should see the bulls step up, though with the spectre of all out war looming large, there will certainly be some caution in the markets.
With the strength yesterdays the 2h chart is bullish still, with the Hull MA at 8281 providing initial support. So this is the level that the bears will want to break if we are to drop lower. If they break the 8240 level then the daily support at 8218 and key fib at 8214 is next up, and should we drop to that then a long here is worth a go. The bulls will certainly be trying to defend the round number.
Ironically with oil rising and dollar strengthening due to the escalation of ME war, it helps the FTSE100...
For the bulls they will be looking to break and hold above the 8300 level as that keeps alive the potential for a test of the 8345 level and then 8386 R3 above that. Might be a big ask but you never know, and with ADP employment news at 1315 from the USA, it could help them, as the forecast is a rise to 124k. A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.
Talking of US markets both the S&P500 and the Nasdaq are at the bottom of the 10d Raff channels at 5675 and 19640 respectively, so it will be interesting to see if those areas provide support.
For the FTSE100, we are mid point on both of our Raff channels, with the 20d still heading up. Feels like buy the dip for the FTSE100 is still the preferred play for the moment.
So, keep an eye on the news and the key levels above - ball is in Israel's court again now following Iran's missile barrage.......
Good luck today.
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