22nd January 2019
The FTSE 100 remained steady from its opening price of 6971.05 to a close of 6970.59, after Theresa May announced her Plan B for Brexit, after suffering an embarrassing defeat for her proposed agreement last week. In her opening statement she said she was planning on “the strongest possible protections on workers’ rights and the environment”, and the Government is still working on how to avoid a hard border in Ireland. Specific policies included waiving the £65 fee for EU citizens to apply for settled status.
Asian markets kept stable after data from China showing GDP grew by 6.6pc last year, the slowest rate for 28 years and down on last year’s rate of 6.8pc, according to official data. Analysts said the US-China trade war was dampening growth.
The IMF chose to present its update on the global economy at the World Economic Forum in Davos, Switzerland. It warned that a slowdown in the eurozone could be worsened by eurosceptic movements across the continent.
The International Monetary Fund has downgraded its global growth forecasts for the second time in three months, warning that a range of threats from the trade war to a no deal Brexit could derail the economy in 2019. The Washington-based organisation cut its GDP growth forecasts to 3.5pc in 2019 and 3.6pc in 2020, down 0.2 and 0.1 percentage point compared to October’s outlook.
The IMF said that a “range of triggers” posed a threat to growth, prompting the “modest” revisions to its outlook. It said that the trade war, a no deal Brexit, tightening financial conditions for companies and sharp slowdowns in China and the Eurozone were the main risks for the world economy. The Brexit “cliffhanger” is the biggest threat to the British economy, IMF chief economist Gita Gopinath said, warning that the certainty had already dampened business investment.
The IMF’s gloomy warning came as the global elite gather for the annual World Economic Forum in Davos, Switzerland.
FTSE 100 Trading Signals, Forecast and Prediction
After a very flat day yesterday as the US was closed we should see a bit more movement today. The FTSE always used to be flat when the US was closed however the past few times it has remained fairly volatile with all the Brexit going ons. Yesterday was almost a return to some normality! Anyway, the 6970 level was where it closed, and we have the daily pivot and 30min coral looking to converge at that area 6975 this morning to set up some early resistance. We have dropped off a bit overnight and are sitting on a bit of support as I write this, at 6944 so may well see an initial kick up first thing.
However, it looks like we will see a test of the 6925 support area this morning, especially if the bears do manage to drop it off the 6975 area and this area looks like it might hold. We have a key fib and also the 200ema on the 30min here, and it will be a decent retrace to a moving average since Friday’s strong rally to the 7000 level. We also have S3 at 6915 for today, with a. rising green 2 hour coral, currently at 6909 as I write this. As that will move up during today it also lends support to this area.
The slight spanner in the works is that both the Dax and S&P 2 hour charts are bearish with resistance at 11157 and 2669 today so it will be worth keeping a close on the FTSE reaction at the key levels.
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