Homebuilder Struggles Weigh on Stocks: FTSE 100 Falls
Stocks continue to fall as homebuilders struggle.
FUNDAMENTAL OVERVIEW
Yesterday’s Super-Hike and Private Sector Growth Concerns: The FTSE 100 experienced a 0.3% decline, reaching 7,483.02 points, as homebuilders faced difficulties. Investors remain cautious due to the recent significant increase in UK interest rates, with expectations of further hikes looming. Concerns are mounting regarding the potential impact on corporate earnings, as pointed out by Matt Britzman, a stock analyst at Hargreaves Lansdown (LON: HRGV). Furthermore, the release of a study indicating a decrease in the private sector’s growth rate for June added to investor apprehension.
Manufacturing and Services Indices Reflect Challenges: The manufacturing output index remained stable at 47.7, while the UK manufacturing PMI declined to 46.2 from the previous month’s 47.1, hitting a six-month low. The flash UK PMI composite output index, which is a weighted average of the manufacturing and services indices, dropped from May’s 54.0 to 52.8, lower than the consensus expectation of 53.6. S&P Global highlighted that overall private sector growth reached its lowest level since March, primarily due to a “much softer” increase in new order intake as some clients curtailed expenditure.
The industrial survey revealed a notable occurrence—an explicit decline in factory gate costs, marking the first time in over seven years. However, the major purchase index fell one point to -25, indicating a decline in consumers’ willingness to make significant purchases. These mixed signals regarding inflation further complicate the economic landscape.
FTSE 100 TECHNICAL ANALYSIS DAILY CHART:
Analyzing FTSE 100’s Technical Performance
Technical Overview: The FTSE 100 is currently operating within a downward channel, indicating a bearish trend. It is trading below all Simple Moving Averages (SMA). The Relative Strength Index (RSI) suggests a bearish sentiment, while the Stochastic oscillator indicates a downtrend. Key levels:
- Immediate Resistance: 7501.1
- Immediate Support: 7470.4
STRATEGIES TO TRADE FTSE 100 THIS WEEK
Navigating the FTSE 100’s Decline Following a significant surge, the FTSE 100 reversed direction and began to fall. Currently, it is trading lower, approaching a crucial support level. If this support area breaks down, further decline is anticipated. Traders should consider the following trade suggestion:
Trade Suggestion:
- Sell at 7461.7
- Target: 7413.3
- Stop Loss: 7510.1
With these insights, traders can make informed decisions in the FTSE 100 market, taking advantage of potential trading opportunities and managing risks effectively.
Monitor the market closely and adapt your trading strategy based on evolving conditions. Stay updated on economic indicators and corporate developments to seize favorable trading prospects in the week ahead.