Technical analysis for FTSE 100 for 16th April 2024
The UK's benchmark FTSE 100 lost ground on Monday hurt by losses in heavyweight energy shares and precious metal miners on growing geopolitical risks due to conflict in the Middle East, while a rise in BAE Systems (LON:BAES) kept the declines in check.
The resources-heavy FTSE 100 fell 0.5% from nearing its record-high levels hit on Friday. The midcap FTSE 250 index was down 0.1%.
Precious metal miners led sectoral losses, sliding 5.2%, while heavyweight oil and gas shares dipped 1.8%, tracking lower crude prices as market participants dialled back on risk premiums amid Iran's weekend attacks on Israel.
Aerospace and defence stocks advanced 1.0%, led by BAE Systems which rose 1.4% among other global defence stocks on growing tensions in the Middle East.
Markets will now shift their focus to British consumer prices and retail sales data later in the week for more clues on the Bank of England's monetary policy path.
Meanwhile, U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground.
Federal Reserve speakers, including Chair Jerome Powell, will also be on investors' radar on Tuesday.
Asia
Asian stocks fell and the dollar climbed to more than five-month highs on Tuesday as stronger-than-expected U.S. retail sales for March further reinforced expectations that the Federal Reserve is unlikely to be in a rush to cut interest rates this year.
Rising geopolitical tensions kept risk sentiment in check, lifting prices of gold and oil, while data showed China's economy grew 5.3% in the first quarter year-on-year, easily beating analysts' expectations.
The data from China was a welcome sign for policymakers as they try to shore up demand and confidence in the face of a protracted property crisis. The government is aiming for economic growth of around 5.0% for 2024, a target that many analysts believe is ambitious and may require more stimulus.
China stocks, tracking broader markets, were lower, with the blue-chip index down 0.36%, while Hong Kong's Hang Seng Index slid 1.27%.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.76% to a nearly two-month low of 519.93, with Japan's Nikkei down 1.9%.
U.S. stocks closed sharply lower on Monday as a jump in Treasury yields weighed on sentiment amid concerns about rising tensions between Iran and Israel.
Israelis awaited word on how Prime Minister Benjamin Netanyahu would respond to Iran's first-ever direct attack on their country. Netanyahu on Monday summoned his war cabinet for the second time in less than 24 hours to weigh a response to Iran's weekend missile and drone attack, a government source said.
U.S. retail sales rose 0.7% last month, the Commerce Department's Census Bureau said on Monday, while economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%.
The stronger-than-expected data comes after a report last week underscored inflation remains stickier than markets had expected, leading to a drastic scaling back of rate cuts this year.
Growing tensions
Top Israeli military officials reiterated that the country has no choice but to answer Iran’s weekend drone and missile attack, even as European and US officials boosted calls for Israel to avoid tit-for-tat escalation that could provoke a wider war. In other security news, the US, Japan and South Korea on Wednesday will hold a meeting of financial chiefs in Washington, part of the effort to counter geopolitical and economic threats. US Treasury Secretary Janet Yellen, Japanese Finance Minister Shunichi Suzuki and South Korean Finance Minister Choi Sang-mok are expected to discuss sanctions against Russia and North Korea, as well as support for Pacific island nations.
FTSE 100 technical analysis for today, 16th April 2024
A very bearish Monday is likely to roll into more downside and negative bias today as the worry about the next phase and Israel's response. The FTSE100 may well be heading for a test of the daily support at the 7830 area today and we may well see a bit of a bounce here, despite the negative sentiment pervading everything currently. The S&P500 is certainly spooked having dropped 2.6% since Friday.
That was a good reaction at the 8010 yesterday. The bears grabbed their chance and overnight we have finally dipped below the 7900 level. As such shorting the rallies is probably the best play given the turmoil currently. However, 7830 may well see a bit of a bounce to set up one of those rallies!
Below the 7830 level then the 7780 level is next up and just above the S3 level at 7764, with ultimately 7750 below that. We are also just testing the bottom of the 20d Raff channel as I write this, at the 7847 level which has seen a bit of an overnight bounce. The bottom of the 10d Raff channel is at the 7829 level as well, lending some weight to a possible bounce (and maybe short-lived) here.
Resistance wise today then the 7930 level is the now red 30m coral and likely to see a reaction as would also be another test of the Hull MA on the 2h. Talking of the 2hr timeframe the coral is also red on this with resistance at the 7960 level so watch out for this above the 7930.
Feels a bit of a big ask for today but higher up we then have 7986 for R1 and the key fib at 7993. Not sure we will be getting that high today unless Israel say they won't be doing anything.
On the news front unemployment has ticked up to 4.2% from 3.9% previously.
So brace for another interesting day as the markets try to navigate the news. Watch out for the 7930 resistance and 7830, 7780 supports.
Good luck today.
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