FTSE 100 nears record high as USD/JPY finds support and silver price bounces back
Technical analysis of the FTSE 100as it nears its record high while USD/JPY finds support and the silver price bounces back.
Macro update
Asia trading muted by holidays:
Regional markets were subdued with China, South Korea and Taiwan closed for Lunar New Year, leaving thin volumes and modest gains for Japan’s Nikkei 225, up 0.2%, and MSCI Asia-Pacific ex-Japan, up 0.4%.
Weak Japan GDP cools sentiment:
Japan’s economy expanded just 0.2% annualised in the fourth quarter (Q4), well below the 1.6% forecast, reinforcing calls for additional fiscal stimulus and taking some shine off recent equity strength.
Futures tick higher ahead of key data:
US and European equity futures edged firmer as investors looked ahead to Friday’s US Q4 gross domestic product (GDP) release and global manufacturing surveys; US growth is expected at 3.0%, down from 4.4%.
AI capex boom squeezes buybacks:
Hyperscaler capital spending plans have climbed to $660bn, contributing to a 7% annual decline in S&P 500 buybacks and driving rotation into defensive sectors such as consumer staples, while software stocks have fallen 24% over three months.
Bond yields fall as cuts are priced:
Two-year Treasury yields closed at 3.41%, the lowest since mid-2022, with markets pricing a 68% chance of a Federal Reserve (Fed) cut in June and roughly 62bp of easing this year.
Dollar steadies, gold slips:
The US dollar index - down 0.8% last week - was slightly firmer against the Japanese yen at 153.05, while gold fell 1.3% to $4973 an ounce and oil held steady amid reports OPEC may resume output increases from April.
FTSE 100 trades near record highs
The FTSE 100 continues to trade near last week's record high at 10,543, a rise above which would likely engage the 11,000 area.
Immediate resistance sits at the 4 February high at 10,482 and support at 10,429 - 10,426 as well as at 10,379. While remaining above the latter, short-term upside pressure is expected to be maintained.
Short-term outlook:
Bullish while above the 12 February low at 10,211.
Medium-term outlook:
Bullish while above the 20 January low at 10,379.
FTSE 100 daily candlestick chart
USD/JPY finds support
USD/JPY has rapidly come off last week's ¥157.72 high and slid all the way to Thursday's ¥152.27 low, above which it has been holding since then before beginning to recover some recently lost ground on Monday with Thursday's high at ¥153.76 being in sight. Further up beckons the mid-December low at ¥154.40.
A fall through ¥152.27 would likely lead to the late January trough at ¥152.10 being eyed.
Short-term outlook:
Bullish while above the 12 February low at ¥152.27.
Medium-term outlook:
Neutral while above the January low at ¥152.10 but below the ¥159.42 January peak.
USD/JPY daily candlestick chart
Silver holds at support
The price of silver is seen holding above Friday's $73.9829 low , made close to its 8 January $73.8425 low. Were these levels to give way, the late December and early February lows at $71.3157 - $70.0750 would be back in view.
As long as last week's low at $73.9829 holds, though, Friday's high at $79.3592 remain in sight, a rise above which would probably push the late December to early January highs at $82.7706 - $84.0301 to the fore.
Short-term outlook:
Bullish while above the 13 February low at $73.9829.
Medium-term outlook:
Neutral with a bearish bias while above the 6 February low at $64.0626.
Silver daily candlestick chart
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