FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
UK stocks were under pressure Friday after data showed factory activity lost more steam in June amid elevated price pressures, underlining the risk of a sharp slowdown or a recession in Britain. However, despite that the FTSE 100 ended flat, after rallying from the 7100 level as the new month money helped undo Thursday’s drop.
Both the indexes started the second half of 2022 on a subdued note after a rough first half amid worries that rapid rate hikes to tame high inflation would trigger a global recession.
US equity futures fell and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continue to handicap markets.
In a quiet session ahead of the US Independence Day holiday, an Asian share index climbed but was off session highs, S&P 500 and Nasdaq 100 contracts shed more than 0.5% and European futures pushed higher.
Sovereign debt extended a rally triggered by a reassessment of how high central banks can hike interest rates to fight inflation given that economic expansion is wobbling. Bonds rose in New Zealand and Australia, while Treasury futures were little changed — there’s no cash trading due to the US break.
The dollar was firm, oil slid closer to $108 a barrel and Bitcoin retreated toward the $19,000 level.
Global share markets wavered on Monday as a run of soft U.S. data suggested downside risks for this week’s June payrolls report, while the hubbub over possible recession was still driving a relief rally in government bonds.
The search for safety kept the U.S. dollar near 20-year highs, though early action was light with U.S. markets on holiday.
Cash Treasuries were shut but futures extended their gains, implying 10-year yields were holding around 2.88% having fallen 61 basis points from their June peak.
MSCI’s broadest index of Asia-Pacific shares outside Japan were flat, while Japan’s Nikkei added 0.6%.
Chinese blue chips were little changed as cities in eastern China tightened COVID-19 curbs on Sunday amid new coronavirus clusters. read more
EUROSTOXX 50 futures added 0.5% and FTSE futures 0.6%. However, both S&P 500 futures and Nasdaq futures eased 0.6%, after steadying just a little on Friday.
Earnings season starts of July 15 and expectations are being marked lower given high costs and softening data.
The Atlanta Federal Reserve’s much watched GDP Now forecast has slid to an annualised -2.1% for the second quarter, implying the country was already in a technical recession.
The payrolls report on Friday is forecast to show jobs growth slowing to 270,000 in June with average earnings slowing a touch to 5.0%.
Yet minutes of the Fed’s June policy meeting on Wednesday are almost certain to sound hawkish given the committee chose to hike rates by a super-sized 75 basis points.
The market is pricing in around an 85% chance of another hike of 75 basis points this month and rates at 3.25-3.5% by year end.
FTSE 100 live outlook prediction analysis for 4th July 2022
After Fridays rise, we may well see a bull Monday kick in, at least initially. The USA is closed today for Independence Day, so we may well see more of a drift on the FTSE100 today. I am looking at an initial rise to the resistance zone at 7260-7275 and if we do so then we could see the bears have a go here.
If they do then a drop down to the daily pivot and the 30m coral at the 7180 level would fit the chart well. 7260 is the red 2h coral and would be the first test of it since it changed to a bearish trend, so it should in theory get a reaction.
Above the 7277 R1 level then bulls will be a lot more confident as 7300 then comes into play, and being daily resistance is a level that they would want to test (and ideally break above). 7321 is then the 200ema which is what we dropped off last week so a break of that bodes well for continued upside. The 10 day Raff channel is heading up fairly steeply now, and as long as the bottom of that channel at 7120 holds then the bulls may well remain in charge for the moment.
That said we are coming into earnings season mid month so a rise ahead of that does make sense, though we may well see some disappointing earnings as the general slow down rolls through. Going to be interesting that’s for sure!
For the bears, they will be looking to break below the 7180 level as we have decent support here (and I am thinking that will hold for a decent bull Monday). Below that then 7164 is the key fib, with S1 at 7140 below that.
If the bears break below that the 7100 will okelly be seen to double bottom with Friday, and then 7090 tested too. A break of that gets things properly bearish again, with 7000 coming back into play. I am not expecting us to get below 7100 today though.
So, a rise, dip, rise pattern for today looks possible and I am watching that 7260/7275 area as decent resistance, and 7180 as decent support.
Good luck today.
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