Technical analysis for FTSE 100 for 3rd July 2024
London's benchmark stock index closed at more than a two-month low on Tuesday as investors were cautious ahead of parliamentary elections, although an uptick in oil prices helped offset the declines.
The blue-chip FTSE 100 fell 0.6% at 8,121.2, while the mid-cap FTSE 250 was off 0.1%. The pound gained 0.2% against the dollar and was last at $1.2676.
Markets were clouded with caution as polls suggested the Conservatives looked set to be replaced after 14 years in voting on July 4.
Across the Atlantic, Federal Reserve Chair Jerome Powell said the U.S. central bank still needs more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture. U.S. job openings increased in May after posting outsized declines in the prior two months, data showed.
Asia & Overnight
Asian stocks rose on Wednesday as comments from Fed Chair Jerome Powell reinforced expectations that U.S. rate cuts were not far off, while the yen remained pinned near levels last seen in 1986, keeping traders wary of Japanese intervention.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.26% higher, while Japan's Nikkei rose 0.49%, stalking the record high touched in March.
The U.S. is back on a "disinflationary path", Powell said on Tuesday, although he cautioned that policymakers need more data before they can consider cutting interest rates.
Powell's comments sent U.S Treasury yields 4.3 basis points lower overnight, with the yield on the 10-year note steady at 4.433% in Asian hours on Wednesday, keeping the dollar subdued. Investors were also weighing data showing a tight U.S. labour market.
Traders are currently pricing in a 69% chance of the Fed cutting rates in September and as many as two rate cuts this year, a far cry from the over 150 basis points of easing expected at the start of the year.
Chinese stocks fell in early trading, with the blue-chip CSI 300 index down 0.27%. Hong Kong's Hang Seng was 0.3% higher.
Data showed China's services activity expanded at the slowest pace in eight months and confidence hit a four-year low in June, dragged by slower growth in new orders, suggesting the need for more economic stimulus.
Data on Tuesday also showed euro zone inflation eased last month but a crucial services component remained stubbornly high, likely fuelling concern among some policymakers that domestic price pressures could stay at elevated levels.
Sterling was little changed at $1.2685 ahead of the UK general election on Thursday where the opposition Labour party is widely expected to win a landslide victory.
In commodities, oil prices were higher as U.S. industry data boosted hopes of solid fuel demand during the summer driving season in the top oil consuming nation. Brent crude oil futures rising 0.44% to $86.62 a barrel, while U.S. West Texas Intermediate crude futures were 0.41% higher at $83.15 per barrel.
FTSE 100 technical analysis for today, 3rd July 2024
Coin flip anyone.... pre UK election day and US markets close early.... I am looking at an initial rise towards the 8170 level where we have the 30m 200ema and the R1 level to start with, and we may well see a small pull back from this level to drop down to the pivot. It may be fairly subdued trading today for the FTSE100 as well, ahead of the Labour victory (!!) in the UK elections.
Above 8170, 8189 is the key fib, and then 8204 for R2 and the round number area. If you look at the daily chart we had lots of candle wicks testing the 25ema last week, around the 8220 level and that is now down at 8214 for today, so keep an eye on this level also.
8237 is then R3 and also ties in with the daily resistance at 8240 so should it get this high then I would expect a drop back from here and its a level that is worth shorting.
Support wise, the daily pivot at 8138 is the main one to watch for, as we also have the Hull MA here on the 2h chart, which has gone bullish once again following the bounce from 8105 yesterday. Will we see buy the rumour sell the news play out today!?
Below 8130 (we have the green 30m coral here) then the 8100 level is the fib and the S1 area at 8106, with 8079 below that. Should it get this low then a long here is worth a go as that also ties in with the daily support at 8072, S2 and the 20d Raff channel bottom.
On the news front we have ISM Services PMI at 15:00 in the US, with the Fed minutes at 19:00, but don't forget that the US markets close early.
Good luck today.
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