FTSE 100 AND EUROPEAN STOCKS RECOVER AS SWISS CENTRAL BANK – 24 MARCH
24 Mar 2023
As interest rate hike warnings and banking turbulence persist, the FTSE is still down
FTSE 100 tumbles as banks fall on contagion fears
Credit default swap prices spike in several European banks
Deutsche Bank tumbles 13%, Commerzbank 8%, Barclays 6%
The FTSE 100 and European stocks were lower on Friday after the Bank of England chief warned of further interest rate hikes if firms raise prices and banking turmoil persists.
The FTSE 100 (^FTSE) lost 1.91% to 7,356 points during midday trading.
The governor of the Bank of England (BoE) warned businesses risk fuelling inflation by continuing to increase prices.
Andrew Bailey warned companies that interest rates may need to be raised further if “all prices try to beat inflation”.
Bailey said he had not seen evidence of companies putting up prices more than necessary but warned that policymakers would need to act if inflation looks likely to become “embedded”.
Interest rates were lifted to 4.25% from 4% on Thursday after policymakers on the Bank’s nine-strong Monetary Policy Committee (MPC) voted seven to two for the quarter-point rise following a surprise jump in inflation last month.
“We’ve got to get inflation down. Inflation is too high now. Now we think that it will fall sharply really from the early summer throughout the rest of the year. And we’re confident about that,” Bailey said.
Back in London, markets fell as doubts linger over the global banking sector, dampening risk taking in markets.
Barclays lost 6.77%, NatWest fell 5.48% and Standard Chartered retreated 5.76%, with all three stocks among the five biggest fallers. Analysts at HSBC cut their price target on Barclays.
The slide in European markets shows no signs of abating. Banking shares prices have extended falls on fresh contagion fears after a spike in credit default pricing for several leading European banks.
Over in Europe and Eurozone business activity expanded faster than expected in March, driven by growth in the services sector, indicating that an economic rebound from last year’s energy crisis is yet to be dented by recent banking turmoil.
FTSE 100 TECHNICAL ANALYSIS DAILY CHART:
FTSE 100 is currently trading in the down channel.
FTSE 100 is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting downtrend.
Immediate resistance is at 7418.3 & its immediate support level is 7344.2
HOW TO TRADE FTSE 100 IN THIS WEEK
The FTSE 100 is currently moving in a downward channel and has broken through the support zone and the previous day’s low; if the price stays below, an additional decline is possible.