Regency View:

Morning Report – Monday 21st June

FTSE to open at 6,978 (-39 pts)

Friday’s US and European stock sell-off followed through into Monday’s Asian trading with Japanese, Australian, South Korean and Hong-Kong listed stocks all deep into negative territory as the ‘reflation’ trade unravels.

Last Wednesday’s comments from the Federal Reserve indicated that it could raise rates to combat inflation sooner than expected – causing stocks and bond yields to move lower in unison.

This marks a step change in the market narrative away from inflationary concerns and towards a ‘taper tantrum’ as the traders price-in the impact of reduced monetary stimulus and two rate hikes in 2023.

?Risk Barometer Explained

Friday’s price action saw the FTSE break decisively lower – snapping the ascending trendline which has been in place since February.

The short-term momentum dynamics of the market has changed in favour of the bears, and only a major bounce-back today would change that.

Downside targets for the FTSE come in at the cluster of swing lows which formed during April at 6,852.

FTSE 100 Daily Rolling Futures – Key Levels