15th February 2019
The four-day rally on European markets was derailed by a shock drop in US retail sales growth stoking concerns that the global slowdown has spread to the resilient American economy. Monthly retail sales growth excluding fuel slumped to a post-financial crisis low, contracting 1.8pc in December. The decline is “hard to square” with strong US job figures but the drop suggests that its economy “entered 2019 with less momentum than anticipated”, said Michael Pearce of Capital Economics.
The FTSE 100 avoided the worst of the stocks slide to post a fourth straight day of gains as sterling tumbled on fears the Government would lose a key Brexit vote in the House of Commons.
The pound hit a one-month low versus the dollar and euro amid speculation of a rebellion within the Conservative Party, slipping as low as $1.2773 and €1.1313, respectively. The FTSE 100 gave up most of its strong early gains, closing just 0.1pc higher at 7,197.01. German stocks led the drop in Europe while Wall Street opened lower on the growth jitters.
U.S.-China Said to Be Far Apart on Trade
The U.S. and China have made little progress so far during trade talks in Beijing, leaving much work to be done before President Donald Trump and his counterpart Xi Jinping look to seal a deal at a yet-to-be scheduled summit, according to people familiar with discussions. In closed-door sessions, the sides have failed to narrow the gap around structural reforms to China’s economy that the U.S. has requested, even as both seek to avoid an increase in tariffs after March 1, according to three U.S. and Chinese officials who asked not to be identified because the talks were private. The U.S. has not relented on demands for China to dial back government subsidies for state-owned enterprises and improve corporate governance, one of the people said, an extremely sensitive issue that is seen as a non-starter for Chinese leaders.
US Stocks Fade Into Close
Disappointing economic data and reports the president will declare a national emergency overshadowed news that another government shutdown will be averted. The S&P 500 Index fell, with a late-session drop sealing the decline initially sparked by a disappointing — and contested — report of the worst drop for retail sales in nine years. Initial jobless claims also came in higher than estimated. Bank stocks were among the hardest hit, as the 10-year Treasury yield briefly sank below 2.65 percent. Consumer staples also fell: Coca-Cola saw its biggest loss in 10 years after a disappointing forecast. On the positive side, energy companies advanced as crude prices climbed.
FTSE 100 Trading Signals, Forecast and Prediction
We have had the decent bearish reaction off the 7230 resistance level yesterday and was good to be on that short. The bulls however found support at 7182 level and fought back a bit, though the USA and Asia has weighed things down again, and the FTSE100 futures are back below the 7200 level. Does 7231 become the short term high? On the bullish side, if the bulls are able to break 7212 today then they will be looking to push higher than 7230, with the likely targets 7250 initially, but a better looking 7304 above that which is showing as daily resistance. If the bulls keep fighting then we may well see this level next week. Especially if there is some progress on the trade talks.
The daily chart remains bullish with moving average support at 7025 for now. A pullback from the 7230 to this level ready for another push higher as we head towards “B-Day” on the 29th March might pan out pretty well. The 2 hour chart is bullish (just) with coral support at 7172. This also ties in with the 200ema on the 30min and also S1 area, so we may well see this 7160/70 area act as support initially.
I am thinking that this support area will hold today, though should the bears break below 7154 where we have the key fib then a drop down towards 7130.
So, looking for support at the 7160 area to hold today, though still mindful that the market will probably want to test that 25ema on the daily at 7025 currently before pushing higher. If the bulls were to break 7230 then 7300 and possibly 7400 are on the cards. I am remaining cautiously bullish still, until such time that the 2 hour chart goes bearish – that would give us resistance around the 7200 level and the bears will probably take us down to that daily support. Should today be weak then the 2 hour chart may go bearish today – will be commenting in the chat room today if so.
Good luck today, can pay to be a bit more cautious with lower stakes on a Friday so as not to ruin what has been a good week. Have a good weekend.
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