Technical analysis for FTSE 100 for 12th July 2024
UK stocks closed higher on Thursday, propelled by utilities shares, while an unexpected fall in U.S. inflation cemented bets of an interest rate cut from the Federal Reserve this year.
The blue-chip FTSE 100 index was up 0.4% for the second straight session. The mid-cap FTSE 250 index breached the 21,000 mark for the first time in more than two years and closed 1.3% higher, at an over two-year peak.
The utilities sector index rose 2.1% after regulator Ofwat told water companies to fix crumbling infrastructure without raising the bill as much as they wanted.
Meanwhile, U.S. consumer prices data showed a surprise drop in June, reinforcing views that the disinflation trend was on track and potentially drawing the Fed a step closer to cutting interest rates this year.
The probability of a September rate cut by the Fed rose to 84% following the CPI data on Thursday, versus a 70% chance a day earlier, according to CME's FedWatch tool.
UK data showed earlier in the day the economy grew more rapidly than expected in May, likely lowering the chances of an August rate cut by the Bank of England.
US tech stocks fell sharply as expectations of rate cuts fuel interest in so-called small cap companies. Chip giant Nvidia dropped 4.1pc, Tesla lost 6.9pc, Apple fell 2.4pc, Facebook owner Meta declined 3.8pc and Microsoft dropped 2.8pc amid concerns that US tech giants are overpriced.
The sheer size of Big Tech companies caused the S&P 500 to fall 0.9pc, even though four out of five S&P 500 companies rose Thursday.
Meanwhile, the main US index of small-cap business, the Russell 2000, jumped 3.2pc.
Asia & Overnight
The yen swung between losses and gains on Friday in volatile trade, reflecting investors' skittishness after Tokyo was thought to have intervened to prop up the Japanese currency in the wake of a cooler-than-expected U.S. inflation report.
Moves in the yen against the dollar and other major currencies stole the spotlight on Friday, though in the broader market, Asian stocks were headed
Moves were similarly choppy in the other yen crosses, with the euro and sterling each last up 0.25% against the yen, both reversing earlier losses against the Japanese currency.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.11%, tracking a negative lead from Wall Street, after investors rotated into smaller companies following the U.S. inflation print.
Still, Asia shares remained on track for a weekly gain of about 1.5%, helped by growing bets of imminent U.S. rate cuts.
Those expectations were reinforced after Thursday's U.S. consumer price figures and as Fed officials showed increasing confidence that inflation was coming to heel.
S&P 500 futures were flat, while Nasdaq futures fell 0.1% and EUROSTOXX 50 futures eased 0.06%.
Oil prices meanwhile rose as signs of strong summer demand and easing inflationary pressures in the United States bolstered investor confidence.
Brent futures ticked up 0.25% to $85.62 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.39% to $82.94 a barrel.
FTSE 100 technical analysis for today, 12th July 2024
The FTSE100 held on well yesterday despite the sell off in the USA, so we may well see a bit more upside today. The S&P500 defended that 5580 support where we had the 200ema and the key fib, and has bounced a little bit overnight, while the FTSE100 looks like an initial test of the 8262 R2 and 8272 key fib to start with is on the cards.
We could see a dip off that to test the 8216 daily pivot support, and possibly even the 8200 are where we have decent 2h support from both the Hull MA and the green coral. If were were to test 8200 once again then a long here is worth a go, as we have a rising 10d Raff channel on the daily chart now, showing an uptrend underway.
Ultimately we may well see a rise to test the 8330 area before too long and a test of the red daily coral here - possibly today though on a Friday ahead of the weekend the bulls may be a bit more cautious and 8300 may well cap proceedings. The bulls will be hoping that the US markets bounce a bit after that decline yesterday,
As such I am thinking that we will see a test of the 8290 R3 level (and the 8300) today and a possible bit of profit taking here ahead of the weekend. That would also tie in with a test of the round number, and a positive close for the end of the week as well, if the bulls can push on a bit today and hold the support levels.
Above 8330 then ultimately I am looking for a rise during the rest of July towards the 8450 level, and bear in mind that traditionally July is bullish looking at the sentiment chart posted previously.
If the bears however were to break below the 8195 2h support area then 8170 is next is next with S2 and the key fib here.
The main news is in the USA today with PPI at 1330, with a forecasted uptick to 0.1%. At 1500 we then have the Michigan Consumer sentiment, with 68.5 forecasted.
So generally we could be on for a positive day overall and a test of the 8300 area.
Good luck today and have a great weekend.
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