Technical analysis for FTSE 100 for 28th June 2024
London stocks closed lower on Wednesday for the second straight session, mirroring European bourses, while energy shares weighed the most and investors were on edge ahead of the Federal Reserve's key inflation gauge set for release on Friday.
The blue-chip FTSE 100 edged 0.3% lower while the mid-cap FTSE 250 also slipped 0.3%. The pound dipped 0.5% against the dollar, as investors funnelled funds into the greenback amid growing caution ahead of Friday's release of the personal consumption expenditures price index.
In the UK, investors will watch out for UK gross domestic product (GDP) on Friday for further clues on the direction of interest rates in Britain.
Moreover, Britain's parliamentary elections, scheduled for July 4, are adding to the caution, with investors expecting political uncertainty to impact markets.
The Oil and gas sector ticked 0.6% lower, tracking lower oil prices after U.S. EIA's report.
Asia & Overnight
Asian stocks were on track for a fifth straight month of gains on Friday, bolstered by a growing view that cooling U.S. inflation could prompt the Federal Reserve to ease rates this year, while the yen tumbled to a 38-year low against the dollar.
Friday is packed with risk events for markets after a relatively subdued week, with figures for May's U.S. core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation - taking centre stage later in the day.
Asian markets were little fazed by the first U.S. presidential debate between Democratic President Joe Biden and his Republican rival Donald Trump ahead of the November election, though U.S. stock futures and the dollar rose as investors narrowed the odds on a Trump win.
S&P 500 futures and Nasdaq futures both ticked higher, rising 0.23% and 0.38%, respectively. EUROSTOXX 50 futures gained 0.32%, while FTSE futures advanced 0.27%.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4% and was on track to gain more than 3% for the month, its best performance since February.
Growing expectations of imminent Fed easing and momentum from the artificial intelligence boom have sparked a risk rally across stock markets and catapulted Wall Street to record highs, in turn lifting Asian shares.
Traders are now pricing in a 64% chance of a first Fed cut in September, up from 50% a month ago, according to the CME FedWatch tool, though analysts said those expectations could be derailed if Friday's core PCE figures surprise to the upside.
The yen tumbled to a trough of 161.27 per dollar, its weakest since 1986. The Japanese currency has fallen some 2.3% this month and more than 12% for the year against a resilient dollar, as it continues to be hammered by stark interest rate differentials between the U.S. and Japan, which has maintained the appeal of using the yen as a funding currency for carry trades.
Brent crude oil futures rose 0.47% to $86.80 a barrel, while U.S. West Texas Intermediate crude futures gained 0.57% to $82.21 per barrel.
FTSE 100 technical analysis for today, 28th June 2024
UK GDP has just come in slightly better than forecast at 0.3% YoY, which may well help the bulls pull away from this 8200 level once again. We had a brief foray below yesterday to test the 8165 level but have since climbed back. Today is also the last trading day of the month so we may well see some profit taking later on before the close.
With initial support at 8200 from the daily pivot, as well as the round number, the bears will be looking to break that which would target the 8166 daily support and S1 at 8160. A bounce here would again make sense, otherwise a slide down to 8120 would be the next level of note where we have daily support and S2 at 8126..
The 10d Raff channel continues to head up and has the 8165 level as the bottom of that channel as well, lending more weight to this area.
The 2h chart is however bearish and the bulls will need to break the 8220 level initially where we have the Hull MA, and then 8240 for the red coral line. 8240 looks fairly significant for resistance this morning, as we also have R1 at 8234, and then 8251 for the key fib.
As such any early rise off the back of that news may well falter here, and a slide back down to test the supports should play out. That would also mimic the ASX200 pattern today, and we could see some further weakness in the oil & gas sector today which would weigh on the FTSE100.
News out later of note is in the USA at 13:30 with the PCE data out - slight drop from previous is forecast. Then at 15:00 we have the Michigan consumer sentiment, again a drop forecast. If they come to pass then it may well be the catalyst for a month end profit taking drop.
Good luck today and have a great weekend.
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