FTSE 100 stays close to record high as USD/JPY retraces and silver price rallies
Technical analysis of the FTSE 100 as its trades close to its record high while USD/JPY retraces lower and the silver price once more rallies.
Macro update
Asia leads the rebound:
Asian equities surged, led by Japan’s Nikkei 225 jumping just over 4% to fresh highs as investors welcomed a decisive election result that clears the way for debt-funded fiscal stimulus and reflationary policies.
Chips lift risk appetite:
A late rebound in United States (US) semiconductor stocks underpinned global sentiment, with NVIDIA, Advanced Micro Devices (AMD) and Broadcom climbing 7-8% on Friday, easing concerns over artificial intelligence (AI) spending and pushing Wall Street futures higher.
Japan bonds reflect stimulus risks:
Expectations of increased government borrowing lifted Japanese two-year yields to around 1.3%, their highest level since the mid-1990s, highlighting the tension between growth optimism and fiscal sustainability.
Fed cut expectations return to focus:
Markets are increasingly confident of a US rate cut by June, with upcoming jobs, inflation and retail sales data expected to support easing without signalling a sharp slowdown.
Commodities stay volatile:
Silver steadied after extreme swings and remained up more than 4%, while oil slipped around 1% as traders awaited clarity on US-Iran talks.
Rotation narrative gains traction:
Investors continue to rotate away from high-multiple US tech and heavy AI spenders towards global markets and AI beneficiaries, reinforcing the theme of fading US exceptionalism and renewed interest in Asia and Europe.
FTSE 100 trades near record highs
The FTSE 100 continues to trade close to last week's record high, still targeting the 10,500 region while remaining above Friday's 10,211 low.
Minor support may be spotted between the 2 and 3 February highs at 10,373 - 10,365 ahead of the late January high at 10,278 and the mid-January peak at 10,256.
Short-term outlook:
Bullish while above the 6 February low at 10,211.
Medium-term outlook:
Bullish while above the 20 January low at 10,049.
FTSE 100 daily candlestick chart
USD/JPY encounters resistance
USD/JPY has come off its ¥157.72 intraday high following Japan prime minister Takaichi's LDP historic election win. This high was made close to the 19 December high at ¥157.76, a rise above which would open the way for the 20 January high at ¥158.60 to be reached.
While the ¥157.72 - ¥157.76 resistance zone caps, though, a retracement towards the early January low at ¥156.12 and the early February high at ¥155.78 may ensue.
Short-term outlook:
Bullish while above the 4 February low at ¥155.70.
Medium-term outlook:
Bullish while above the January low at ¥152.10.
USD/JPY daily candlestick chart
Silver price recovers
The silver price is seen rapidly heading back up again, having bounced off Friday's $64.0626 low. The next upside target sits at last week's $92.2049 high, a rise above which may put the psychological $100 region back on the cards.
Short-term outlook:
Bullish while above the 6 February low at $64.0626.
Medium-term outlook:
Neutral with a bullish bias while above the 6 February low at $64.0626.
Silver daily candlestick chart
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