FTSE 100 bounces back as EUR/USD falls out of bed and WTI rises   

Macro update

Asian technology stocks tumble as AI rally reverses: South Korea's KOSPI sank as much as 8.8%, triggering circuit breakers, while Japan's Nikkei lost 4.6% and Taiwan's benchmark declined 3.9% as investors aggressively unwound positions in semiconductor and AI-related shares.

Broadcom outlook and strong US jobs data fuel market selloff: A disappointing forecast from Broadcom, combined with a stronger-than-expected US non-farm payrolls reading of 172,000, intensified concerns that the Federal Reserve may need to tighten policy further, weighing heavily on technology stocks.

Expectations for a Fed rate hike strengthen: Markets now assign more than a 70% probability to a December interest rate increase, up sharply from 45% a week ago, driving two-year Treasury yields more than 11 basis points higher on Friday.

Dollar and oil prices extend gains: The US dollar climbed to a two-month high against major currencies, with the yen weakening beyond the ¥160 level against the dollar, while Brent crude surged by more than $3 to $96.50 a barrel following Israeli strikes on Lebanon and reports of explosions in Iran.

OPEC+ output increase fails to reassure markets: The producer group approved its fourth consecutive monthly production increase, but analysts argued the move would have little practical effect as several members remain unable to meet quotas due to the Straits of Hormuz closure and damage to Russian energy infrastructure.

Inflation data and central bank meetings dominate the week ahead: Investors will be closely watching Wednesday's US CPI report alongside monetary policy decisions from the Bank of Canada and the European Central Bank for fresh direction on the global interest rate outlook.

FTSE 100 bounces back

The FTSE 100 is trying to bounce off Friday's 10,291 low and rise towards last week's 10,415 high. If overcome, the 10,500 region may be revisited.

While no rise above 10,415 is taking place, further sideways trading is likely to remain on the cards but a slip through 10,291 would be expected to lead to last week's low at 10,237 being retested. If fallen through, the late April-to-May lows at 10,171-to-10,113 would probably be back in sight.

Short-term outlook: neutral with a slightly bearish bias while below the 5 Jun high at 10,415

Medium-term outlook: neutral with a bullish undertone while above the 18 May low at 10,113

FTSE 100 daily candlestick chart

EUR/USD falls out of bed

EUR/USD's fall through its May $1.1577 six-week low has swiftly taken the cross towards its early April trough at $1.1506. Were it to not hold, the 23 March low at $1.1485 may be reached as well. Together with the 19 March low at $1.1443 is expected to offer support, though, if reached that is.

Resistance in case of a recovery being witnessed sits in the $1.1577-to-$1.1595 region. Only a bullish reversal and rise above the 4 June high at $1.1645 would indicated that another medium-term up leg is being formed.

Short-term outlook: bearish while below $1.1645

Medium-term outlook: bearish while below $1.1645 with the $1.1485-to-$1.1411 zone being eyed

EUR/USD daily candlestick chart

WTI rises once again

WTI has been sideways trading for the past week or so but seems to be heading back up towards last week's high at $97.00 per barrel. While it and the mid-May low at $97.23 cap on a daily chart closing basis, another move to the downside towards the late May low at $86.35 may ensue.

Were a daily chart close above $97.23 to be made, however, the psychological $100 region would likely be revisited.

Short-term outlook: bullish while above the 5 June low at $89.68

Medium-term outlook: neutral with a bearish bias while below the mid-May peak at $105.21 but above the April low at $78.97 

WTI daily candlestick chart