FTSE 100 at Six-Week Lows as the Market Appears Rattled, 7000 Key Level in Sight

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FTSE 100 at Six-Week Lows as the Market Appears Rattled, 7000 Key Level in Sight

The Blue-Chip Index Closed August Down 1.9%.Annual House Price Growth Slows to 10% vs 11% in July.Mining Stocks Leading the Drop.FTSE 100: at Six-Wee

  • The Blue-Chip Index Closed August Down 1.9%.
  • Annual House Price Growth Slows to 10% vs 11% in July.
  • Mining Stocks Leading the Drop.

FTSE 100: at Six-Week Lows as Market Appear Rattled, 7000 Level in Sight

The FTSE 100 continued its march lower in European trade as losses mount for London stocks, with recession fears rattling the market. The blue chip index lost almost 2% if its value in August with a lot of that move happening toward the end of the month as the economic outlook weakened. The index declined a further 120 odd points to trade around 7163, down from Friday’s highs just above 7500. As traders began the week grappling with rate fears, there was a growing concern regarding the latest round of covid restrictions imposed by key Chinese cities. We have seen a continued flight to the haven dollar despite the prospect of another big interest rate rise by the Bank of England later this month.

The New York Session: Forex Trading Tips

As the energy crisis worsens across Europe, UK household budgets are being harder hit than any country in western Europe, according to the International Monetary Fund. The difference between the cost burden on poor and rich households is also far more unequal in the UK compared with other countries.The reason is the UK’s heavy reliance on gas to heat homes and produce electricity which is not set to decline anytime soon as winter approaches.

House prices rose by 0.8% month-on-month in August, Nationwide said today as it reported a softening in annual growth to 10% from 11% in July, which represents a near £50,000 increase over two years. We could see a further slowdown in the housing market as pressure begins to intensify on household budgets moving forward.

In corporate news, mining stocks led the slide today with commodities trading giant Glencore the worst hit, sliding 7% or 32.6p to 440.7p after the price of copper and other key metals came under more pressure. Other big fallers included car insurer Admiral, which shed 118p to 2004p and Rolls-Royce after losing 2.5p to 74.5p. Mining giant Rio Tinto lost 3% or 165.5p to 4605.5p after securing a deal worth an improved USD3.3 billion (GBP2.85 billion) for the minority interests of Turquoise Hill, a move giving it control of the giant Oyu Tolgoi copper-gold project in Mongolia.

FTSE 100 Daily Chart – September 1, 2022

FTSE 100 at Six-Week Lows as the Market Appears Rattled, 7000 Key Level in Sight

Source: TradingView

From a technical perspective, we had a huge bearish candle close last week which closed as a three-pin formation to the downside. Such a candle formation usually indicates further downside ahead which we have seen every day this week. On the daily timeframe we have seen 4 consecutive days of bearish price action as we now trade below the 20, 50 and 100-SMA with the gradients mixed. We have seen a slight bounce from our daily lows of the day thus far, with there a lot of support between the 7150-7000 key psychological level. If we are to maintain our bearish momentum, we would need a daily candle close below the 7244 area. A bounce higher here could provide an opportunity for sellers around the7300 area which lines up with 50% fib level and the 50-SMA.

Key intraday levels that are worth watching:

Support Areas

7150

7126

7000

Resistance Areas

7244

7300

7381

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Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter:@zvawda

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