FTSE 100 Falls as Miners Weigh and US Rate Hike Fears Rise – 09 March 2023
09 Mar 2023
UK markets decline as investors assess the likelihood of a U.S. rate increase.
Miners’ biggest weight on FTSE 100.
Rio slides on trading ex-dividend.
Aviva jumps after profit rise, buyback FTSE 100 down 0.5%, FTSE 250 off 0.6%.
London’s FTSE 100 fell on Thursday as investors braced for a likely faster and longer period of interest rate hikes from the U.S. Federal Reserve, with miners leading declines as metal prices dropped in the wake of a stronger dollar.
The blue-chip FTSE 100 index (.FTSE) fell 0.6%, and the mid-cap index (.FTMC) lost 0.7%, extending losses for a third straight session.
Overnight, Fed Chair Jerome Powell reiterated that the central bank was prepared to hike interest rates and potentially faster, should U.S. jobs and inflation data warrant, which is typically negative for risk assets.
Strengthening the case for hikes, data showed U.S. job openings fell less than expected in January.
It is basically uncertainty about the path for U.S. rates that have led to a decline in stocks, said Giles Coghlan, chief market analyst at HYCM.
“All eyes are now going to be firmly on (U.S) non-farm payroll (NFP) print on Friday… but the ADP jobs yesterday showed a beat… (and while) ADP doesn’t necessarily do a good job in projecting NFP numbers, it does set the mood.”
The FTSE 100 is up more than 6% so far this year but is off more than 2% from all-time highs hit last month as investors try to assess the impact of rising interest.
While forecasts show the UK economy could avoid a recession, entrenched inflation, and a hawkish Powell have forced traders to price in a more than 50% chance that Bank of England rates will reach 5% later this year from 4% currently.
Among individual stocks, Rio Tinto (RIO.L) dropped 0.6% as the miner traded without dividend eligibility. Falling iron ore and base metal prices weighed on the broader sector.
FTSE 100 TECHNICAL ANALYSIS DAILY CHART:
FTSE 100 is currently trading in the down channel.
FTSE 100 is currently trading below 5&20 SMA.
RSI is in buying zone which suggests bullishness and Stochastic suggests a downtrend.
FTSE 100 immediate resistance is at 7923.9 & its immediate support level is 7879.0
HOW TO TRADE FTSE 100 IN THIS WEEK
FTSE 100 started trading in the down Channel; currently, it is at an important support level, if the level breaks we can see further downside.