US inflation cools | UK GDP flat | 8180 8153 support | 8210 8245 resistance

US inflation cools | UK GDP flat | 8180 8153 support | 8210 8245 resistance

Technical analysis for FTSE 100 for 13th June 2024

London stocks rebounded on Wednesday on revived hopes of interest rate cuts in the near future after data showed cooling inflation in the U.S. and a slowing economy in Britain, while Rentokil Initial further added to the gains.

The blue-chip FTSE 100 closed 0.8% higher in its best day in over a month, while the mid-cap FTSE 250 was up 1.1%, snapping a three session losing streak.

A key U.S. government report showed consumer prices did not rise at all in May, with traders adding to bets of an interest rate cut in September by the Federal Reserve.

The benchmark U.S. S&P 500 rose over 1%, while the tech-heavy Nasdaq Composite Index hit a record high after the data.

Meanwhile, British data showed that economic output was flat in April and the rebound in the economy came to a halt.

Asia & Overnight
Asian equities rallied on Thursday, while bond yields slid, as investors weighed cooling U.S. inflation against a more hawkish posture by the Federal Reserve.

Japanese shares underperformed and the yen inched down against the dollar, as the Bank of Japan began its two-day policy meeting. MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.9%, with Taiwan stocks jumping 1.7% and Hong Kong's Hang Seng up nearly 1%, buoyed by the U.S. S&P 500 and tech-heavy Nasdaq closing at record highs overnight.

U.S. futures pointed to further gains, with S&P futures up 0.2% and Nasdaq futures adding 0.6%.

Japan's Nikkei edged up 0.1% after an initial tech-led advance fizzled.

Wall Street had rallied strongly, while the dollar and Treasury yields tumbled early in the U.S. session, after the closely watched CPI report showed core prices growing at their slowest annual pace in over three years last month.

However, investors were whipsawed later as Fed officials trimmed projections for interest rate reductions this year to a single quarter-point cut.

In his post-meeting press conference, Fed Chair Jerome Powell acknowledged that inflation has eased substantially but still remains too high. At the same time, he said the rate-path decision was a "close call" for many policymakers, and to some degree the Fed had merely traded an earlier start to rate reductions this year by tacking an additional anticipated cut onto 2025.

FTSE 100 technical analysis for today, 13th June 2024

Still running a portion of the short from 8238 into this morning, and it's looking like we may well drop a bit further down to test the 8160 area. Just prior to this we have the 2h Hull MA support at the 8180 level so it will be interesting to see off the bulls can defend that (or the lower one) to start with.

Data suggests that things are slowing down, inflation still being stubborn, and not as many rate cuts as the market was expecting at the beginning of the year are weighing on things, but that said the indices are actually still holding up well. It's said that they look six months ahead so the short term news driven moves are not necessarily the true picture.

Below the 8155 support area then the bears would be aiming for the recent low at 8115 and just above S2 which is at the 8107 level. I feel like the higher support at the 8155 level will be defended though.

Resistance wise, then yesterday's high at 8240 remains in play as we still have the daily 25ema here, and then above this the 8260 level is R1 and the key fib. The bulls might have a job to push past that today, as we have more USA PPI news at 1330, with a drop down from previous to 0.1%.

If they do break 8260 the 8301 is R2 and the round number but that would be quite the rise today and I am not expecting it to get that high.

With the Fed inferring only one rate cut this year (4 in 2025 though apparently!) then markets may well welcome the more defined route, as they don't like unexpected news. That may well see the S&P500 etc to continue to push on. and keep the bullish momentum that it currently has. The Raff channels on this and the NASDAQ are both continuing to head upwards, while the FTSE100 are both heading down!

So thinking a dip and rise today, with a possible dip later on as well. Watching that 8180 level to start with and see if they defend the 2h support, though an overshoot and bounce at 8155 instead may well materialise.

Good luck today.

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