European Open: FTSE falters at resistance, gold steady ahead of FOMC

Asian Indices:

• Australia's ASX 200 index rose by 23.9 points (0.35%) and currently trades at 6,831.20
• Japan's Nikkei 225 index has risen by 84.04 points (0.3%) and currently trades at 27,739.25
• Hong Kong's Hang Seng index has fallen by -281.92 points (-1.35%) and currently trades at 20,623.96
• China's A50 Index has fallen by -137.64 points (-0.98%) and currently trades at 13,933.25

UK and Europe:

• UK's FTSE 100 futures are currently up 27 points (0.37%), the cash market is currently estimated to open at 7,333.28
• Euro STOXX 50 futures are currently up 12 points (0.34%), the cash market is currently estimated to open at 3,587.36
• Germany's DAX futures are currently up 65 points (0.5%), the cash market is currently estimated to open at 13,161.93

US Futures:

• DJI futures are currently up 167 points (0.53%)
• S&P 500 futures are currently up 183.25 points (1.51%)
• Nasdaq 100 futures are currently up 37.5 points (0.96%)

Asian stock market indices were mixed overnight, with the baulk of the moves coming from China’s stock markets as Alibaba weighed on sentiment. Their annual report confirmed a reduced stake in Softbank.

Australian inflation rose to a 21-year high of 6.1%, and there could be further to go until we get the peak. But as it was lower than expected the consensus remains for a 50-bp hike by RBA next week.

The US dollar index rose for the first day in four yesterday, although it is due t weakness from the euro as opposed to a show of dollar strength. Heading into today’s meeting the euro is the strongest major whilst JPY, CHF and USD are the weakest – but they are the usual small ranges we’d expect ahead of an FOMC meeting.

We could be in for a quiet session with the FOMC meeting overshadowing everything. At 19:00 BST the Fed will announce their interest rate decision, with 75-bp the clear favourite – although markets are still pricing in a 24.9% chance of a 100-bp hike.

German consumer confidence is up shortly and, if business sentiment is anything to go by, expect a weak and dismal print. And with friction between Russia and Europe over reduced energy output from Russia then sentiment is likely to remain suppressed next month.

Gold 4-hour chart:

We remain bullish on gold after it printed a large bullish engulfing candle back above $1700. Prices are within a retracement phase and forming a potential continuation pattern, and currently holding above a 50% retracement level. The bias remains bullish above $1700 so we would consider long opportunities above this key level of support. The initial target is around the $1750 resistance zone, although if we look at this as a flag from the 1680 lows then it could project a target around 1770.

FTSE 100 daily chart:

We highlighted a potential swing trade short last week as prices has stalled near 7362 resistance. Whilst it initially dipped lower we can see that a decent top has failed to materialise. However, a bearish pinbar has now formed back at that key resistance level which presents another opportunity for bears to target 7200 and the 7100 support zone (within the 7000 – 7400 resistance zone). We’d like to see a break below 7300 to confirm an interim top and the bias remains bearish below 7365 – a break above 7400 (61.8% Fibonacci ratio) invalidates the current range.

FTSE 350 – Market Internals:

FTSE 350: 4068.09 (0.00%) 25 July 2022

• 75 (21.37%) stocks advanced and 266 (75.78%) declined
• 8 stocks rose to a new 52-week high, 2 fell to new lows
• 26.5% of stocks closed above their 200-day average
• 100% of stocks closed above their 50-day average
• 20.51% of stocks closed above their 20-day average

Outperformers:

• + 4.90% - Bridgepoint Group PLC (BPTB.L)
• + 3.33% - Compass Group PLC (CPG.L)
• + 2.95% - Unilever PLC (ULVR.L)

Underperformers:

• -8.54% - Kingfisher PLC (KGF.L)
• -8.03% - JD Sports Fashion PLC (JD.L)
• -7.94% - ASOS PLC (ASOS.L)

Economic events up next (Times in BST)

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