30 point dividend today to help the bulls | Trade tariff delay short lived rise | 7240 7205 7155 support | 7305 resistance

Markets rattled by trade again | SPX finally drops | 7240 7197 support | 7355 resistance

14th August 2019

US stocks surged on Tuesday afternoon after a US decision to delay or cancel some of its impending tariffs on Chinese exports rekindled hopes of a trade war truce. The Dow Jones Industrial Average, S&P 500 and Nasdaq all rose sharply on the announcement, converting low gains into an almost-immediate rally of more than 1.5pc each.

The Office of the US Trade Representative said tariffs would be cancelled on certain goods because of “health, safety, national security and other factors”, and said a levy on good including “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing” would be pushed back to the 15th December.

China’s Xinhua news agency reported that US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin would continue trade talks with Chinese vice-premier Liu He next month. The prospects for further talks had been thrown into doubt in recent weeks, after US President Donald Trump announced plans to add a 10pc tariff to a further $300bn of Chinese goods, effectively meaning all Chinese exports to the US would have been levied. That announcement sent global indices to their worst week of 2017, with investors rushing to safe-haven assets such as gold and the Japanese yen to avoid the fallout from an escalating trade clash between the world’s two biggest economies.


U.S. President Donald Trump took a step back in his trade war with Beijing, bowing to pressure from U.S. businesses concerned over the economic fallout of the ongoing spat with China. The U.S. said it would delay until mid-December a 10% tariff on a variety of Chinese consumer products such as cell phones, laptops, video games and children’s toys, leavening the impact on holiday-shopping consumers. However, other goods, including agricultural products, antiques, clothes, kitchenware and footwear, will remain on the list to be hit on Sept. 1. The announcement came as Vice Premier Liu He talked with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone. They’re planning more calls in two weeks. But don’t look for the tariff delay to fix the trade war problem just yet.

Some Relief

Asian stocks rallied after the Trump administration de-escalated its trade war with China, providing relief to risk assets that had been under pressure earlier in the week. Treasuries retreated. Japanese futures were more than 2% higher after the S&P 500 saw its biggest intraday gain in more than two months. Elsewhere, oil jumped the most since early January as the trade deadlock between the world’s biggest economies showed signs of easing.

FTSE 100 Trading Signals, Forecast and Prediction

The FTSE 100 dipped just below the 7185 support level yesterday and then didn’t manage to reach 7155 before Trumps tariff news propelled everything north wards. We also have the large 30 point dividend today to be applied which should help the bulls to build on that rise yesterday and as per yesterday. There are a cluster of decent looking supports around the 7250 area. However, should the bears break below 7250 then the daily resistance level of 7155 is still relevant, though we have a key fib and S1 at 7205 as well.

FTSE 100 Trading Signals, Forecast and Prediction
FTSE 100 Trading Signals, Forecast and Prediction

After that rise yesterday the 2 hour chart is now showing support at 7255. The daily chart is still showing resistance at the 7384 level for now, and the 7100 to 7300 range is also still relevant. If the bulls can push past 7300 then I am looking at a test initially of the 7332 resistance level, with that daily one above that.

The S&P rose to its daily resistance at 2940 yesterday on the tariff news, however, it did stumble at that point and the bulls now need to defend the 2917 level for further upside. If they break below this then 2800 beckons again. Was yesterday’s bounce just a short lived move on news?

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