FTSE 100, GBP/USD slip while US natural gas prices rise 

Macro update

Megacap technology stocks weigh on Wall Street: The S&P 500 declined 0.37% and the Nasdaq fell 1.32% on Monday as major technology names came under pressure, with Alphabet dropping 5% and SpaceX sliding 16.4% following its inaugural debt issuance, while the Dow Jones managed a 0.29% gain thanks to strength in healthcare and industrial shares.

Asian equities edge lower in Tuesday trading: MSCI's Asia-Pacific index excluding Japan slipped 0.5%, Japan's Nikkei fell 1% after an eight-session winning streak, and South Korean stocks lost 2%, while S&P 500 futures pointed to a weaker US open.

Markets raise expectations for further Federal Reserve tightening: Investors now see a 75% chance of a September rate increase and a 54% probability of at least two 25-basis-point hikes before the end of the year, up sharply from 15.2% a week ago, after Fed Chair Kevin Warsh reinforced the central bank's commitment to bringing inflation back to target.

Dollar remains near a one-year high as yields stay elevated: The dollar index held around 101.06, supported by Treasury yields, with the two-year note trading close to its highest level in 16 months.

Oil prices continue to retreat as Hormuz traffic normalises: Brent crude eased a further 0.3% to $77.70 a barrel, extending Monday's decline of more than 3% after the US granted Iran a 60-day sanctions waiver, while tanker traffic through the Strait of Hormuz continued to recover.

Yen remains close to its weakest level in nearly four decades: The Japanese currency traded at 161.62 per dollar, near levels not seen since 1986, prompting emergency discussions between Japanese Finance Minister Katayama and US Treasury Secretary Bessent, although officials stopped short of signalling any imminent market intervention.

FTSE 100 back under pressure

The FTSE 100 is seen coming off Monday's 10,447 high and may retest Monday's 10,309 low, a fall through which may lead to the 4 June low at 10,237 being revisited. Further down lies key support between the late April-to-June lows at 10,171-to-10,113.

Minor resistance above the 55-day simple moving average (SMA) at 10,402 sits at Monday's 10,447 high, a move above which would push the early May high at 10,488 to the fore. Further up lie the May-to-June highs at 10,568-to-10,573.

Short-term outlook: neutral with a bearish slant while below the 15 June high at 10,568 but above the May low at 10,113

Medium-term outlook: neutral while above the 18 May low at 10,113 but below the May 10,573 high. 

FTSE 100 daily candlestick chart

GBP/USD stabilises above March/April lows

GBP/USD's decline has taken the cross to $1.3163, close to its late March low at $1.3160, which acted as support. While it continues to hold, a minor bounce towards the 18 May-to-8 June lows at $1.3303-to-$1.3306 may unfold.

A fall through and daily chart close below $1.3160 may lead to the $1.3100 region being revisited.

Short-term outlook: bearish while below $1.3461 but is trying to stabilise above the $1.3160 late March low

Medium-term outlook: neutral while trading within its $1.3160-to-$1.3658 March-to-May boundaries; failure at $1.3160 would be bearish and eye the $1.3300 region

GBP/USD daily candlestick chart

US natural gas futures remain sidelined

US natural gas futures continue to range trade below their recent 322.8-to-323.8 peaks and the 200-day simple moving average (SMA) at 313.8.

While the April-to-June uptrend line at 295.1 underpins, further range trading is at hand.

A slip through the uptrend line may put the mid-February highs at 289.9-to-287.9 and the early February low and mid-June low at 286.5-to-286.2 on the map.

Short-term outlook: neutral while below the 1 June high at 323.8 but above the 286.2 mid-June low

Medium-term outlook: bullish while above the 25 May low at 267.4

US natural gas daily candlestick chart