Technical analysis for FTSE 100 for 31st May 2024
Britain's stocks rose on Thursday, with the FTSE 100 snapping a six-day losing streak as Auto Trader hit a record high after a profit-beating update, while declines in resources shares countered some gains.
The blue-chip FTSE 100 index closed 0.6% higher, while the mid-cap FTSE 250 jumped 1.2%, its best day in over three weeks.
Most major sectors ended the day higher, led by the personal goods sector, which rose 3.0%, followed by a 2.5% rise in real estate investment trusts. Energy shares dipped 0.3%, however, tracking a fall oil prices.
The yield on the 2-year UK government bond pulled back from a three month high, and recorded its worst day since February 2023.
The benchmark FTSE 100 has retreated 2.8% from a record high hit in mid-May as stronger than expected economic data prompted traders to pare back bets on U.S. and UK interest rate cuts this year.
Investors are now on guard as they wait for U.S. personal consumption expenditures (PCE) data, the Federal Reserve's preferred inflation gauge, due on Friday, for clues on its future monetary policy path.
Bank of England Governor Andrew Bailey is also set to deliver a speech later on Thursday.
Asia & Overnight
Asian stocks rose on Friday and were poised for the fourth month of gains, while the dollar drifted lower, keeping the yen steady as investors await inflation readings from Europe and the U.S. that will likely dictate the path of interest rates globally.
A downward revision to consumer spending meant the U.S. economy grew more slowly than expected in the first quarter, data showed on Thursday, weighing on Treasury yields and the dollar.
The economic data also stoked expectations that the Federal Reserve has scope to cut rates this year, with market pricing putting a September cut at a coin toss, CME FedWatch tool showed. For the year, traders are pricing in 35 basis points of easing.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.55%, pushing away from the three-week low hit on Thursday. The index is set for a 1.4% decline for the week but is up 2.7% in May, rising for the fourth straight month.
Japan's Nikkei was up 0.20% and is flat for the month. China stocks also rose, with the blue-chip index up 0.23% while Hong Kong's Hang Seng index spiking 1.3% higher.
The upturn in China's markets came even as the nation's manufacturing activity unexpectedly fell in May, an official factory survey showed on Friday. The soft outcome kept alive calls for fresh stimulus as a protracted property crisis continues to weigh on businesses, consumers and investors.
Financial markets have been biding their time for the main data event of the week - Friday's April report on U.S. core personal consumption expenditures (PCE) price index, which is the Fed's preferred inflation gauge.
Federal Reserve policymakers continue to expect inflation to fall this year even as the labour market stays strong, leaving them in no hurry to cut the policy rate from the 5.25%-5.5% range they have kept it in since last July.
In commodities, oil prices eased after a surprise build in U.S. gasoline stocks weighed on the market. Brent futures was down 0.31% at $81.61 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 was down 0.36% at $77.63.
FTSE 100 technical analysis for today, 31st May 2024
The FTSE100 fought back from the 8140 level yesterday and even managed to break the 8200 level and hold above it. A bit of action ahead of today's USA inflation news at 1330 as some buy the rumour kicks in. We may well see a bit more of a choppy day today with that in play, and I am looking at the 8250, 8265, and 8310 as the main resistance levels. As it is also the last day of the week and also the month we may well see some profit taking later on today.
The S&P500 and other US indices are looking weaker with the Dow on the cusp of a potential sizeable drop. That said the bulls will be fighting tooth and nail to keep it up and get a climb off the bottom of the Raff channels - we are near the bottom of them on both the S&P500 and NASDAQ.
So back to the FTSE and obviously expect some volatility at 1330 but I think we may well see a generally bullish day again today, with a rise towards the 8300 area overall. 8308 is R2 along with daily resistance at the 8324 level.
The support level from the daily pivot at the 8203 level looks like it may well hold if it gets tested, with 8152 key fib lower down. The bulls will be keen to build on yesterdays climb though and won't really want a break of 8200. As such a long here is worth a go.
With the climb yesterday the 2h chart has gone bullish, and has support from the Hull MA at the 8185 level - we could spike that low to test that but having moved above the red coral line it feels like it won't get that low. I am more inclined to go with the 8200 area holding.
The key for the bulls will be a move above the red 10d Raff channel you can see on the daily chart, with the 8268 level here.
Investors are keenly awaiting Friday's US core PCE inflation report, the Fed's preferred gauge, as well as euro zone inflation figures, which will influence rate hike paths.
Good luck today and have a great weekend.
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