FTSE 100 Shakes Off Recession Dangers Rising Above 7700

FTSE 100 Speaking Factors:

• FTSE 100 breaks technical barrier of resistance turned help at 7000.
• UK equities drive FTSE larger forward of US CPI.
• Worth motion returns to 2018 ranges with the all-time excessive looming at 7903.

FTSE 100 Rises to 2018 Ranges Regardless of Rising Dangers of a World Recession

FTSE 100 costs proceed to trace larger, defying all dangers of a rising recession. With the foremost UK fairness index conquering prior technical hurdles which have remained in place since 2019, the elemental outlook has accomplished little to discourage FTSE bulls.

With worth motion at the moment holding above the important thing psychological stage of 7700, a transfer above the January 2020 pre-pandemic excessive of 7689 has supported the latest transfer.

FTSE 100 Weekly Chart

Chart ready byTammy Da Costautilizing TradingView

Very like its international inventory counterparts, the UK fairness index that represents the biggest 100 corporations in the UK struggled to carry positive factors all through final yr. With the onset of the Coronavirus pandemic driving costs to a low of 4898.79 in March 2020, a mix of technical and basic components have contributed to the FTSE restoration since.

To fight the results of the worldwide lockdowns initially carried out to stop the virus from spreading, low rates of interest and quantitative easing measures assisted in driving a rebound in equities.

Because the restoration gained traction, an approximate 56% rally allowed the FTSE 100 to rise again above 7000 earlier than reaching a excessive of 7687 in February final yr.

Nonetheless, with the warfare in Ukraine exacerbating worth pressures, elevated inflation and diminishing progress forecasts dampened sentiment, driving costs decrease. Though rising volatility and uncertainty resulted in massive worth swings occurring all through 2022, failure to realize traction above 7600 helped ease the upside transfer.

After a powerful begin to 2023, a powerful bullish transfer has allowed FTSE to push larger, driving costs above prior resistance turned help at 7689.

FTSE 100 Day by day Chart

Chart ready byTammy Da Costautilizing TradingView

FTSE 100 Technical Ranges

With the present month-to-month excessive holding round 7724, the 7790 – 7793 zone offering resistance all through 2018, a transfer larger may drive costs larger.

Whereas the all-time excessive stays in sight at 7903, the 7800 psychological stage may present one other hurdle for the short-term transfer.

Nonetheless, with fee expectations and the inflation narrative nonetheless dominating sentiment, tomorrow’s US CPI print may present an extra catalyst for worth motion.

DailyFX Financial Calendar

If inflation stays elevated, the likelihood of one other aggressive fee hike on the upcoming FOMC may place extra stress on inventory indices.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and comply with Tammy on Twitter: @Tams707