Surprising Inflation and FTSE 100 Concerns
Fears of rate increases are stoked by an “ugly inflation report,” and the FTSE is at its lowest level since March as a result.
The ONS’s inflation statistics surprised the city once more this morning when they came in far higher than anticipated for the third consecutive month, at 8.7%.
Inflation was supposed to fall to 8.2%, according to economists.
The FTSE 100 is currently trading lower as concern about the US debt ceiling negotiations spreads throughout the world markets.
UK manufacturing growth slowed in May as the sector was hit by rising costs and supply chain disruptions.
The Markit/CIPS manufacturing purchasing managers’ index (PMI) fell to 54.6 in May from 55.8 in April.
The index has been on a downward trend since the beginning of the year, as investors have become more concerned about the impact of the war in Ukraine on the global economy.
The headline rate for inflation in the United Kingdom fell from 10.1% to 8.7% on Wednesday morning, however, this was higher than the 8.2% Reuters consensus prediction. Price growth exceeded expectations and exceeded 1.2% month over month.
Jeremy Batstone-Car, the European strategist at Raymond James Investment Services, claimed that accounting techniques were to blame for a sizable portion of the April decline. Energy costs increased by 47.5% in April 2022. Due to the government’s energy price guarantee, the year-over-year energy surge is no longer a factor, which causes the comparative inflation rate to gradually decline.
The Bank of England is expected to increase interest rates further as core inflation increased from 6.2% to 6.8%.
FTSE 100 TECHNICAL ANALYSIS DAILY CHART:
FTSE 100 is currently trading in the down channel.
FTSE 100 is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting a downtrend.
Immediate resistance is at 7682.1 & its immediate support level is 7625.5
HOW TO TRADE FTSE 100 IN THIS WEEK
The FTSE 100 reverted to the fall after making a big upward movement, changing its trend. We could expect that the FTSE 100 will drop to its second significant support now that it has broken its critical support and prior day low.
