23rd September 2019
London stocks were a mixed bag on Friday, shaken about by Brexit-driven moves in the pound that kept the FTSE 100 wobbling right up to the closing bell.
Sterling ended narrowly higher against the dollar, securing an overall weekly gain for a third consecutive week – the first time it has done so since January.
The currency shifted sharply as traders absorbed the latest twists and turns in the Brexit saga. After rising sharply after the end of trading on Thursday to reach a two-month high against the dollar and four-month high against the euro, it pared back its gains following downbeat comments on the state of negotiations from deputy Irish prime minister, Simon Coveney.
The exporter-heavy FTSE 100, which tends to suffer from a strong pound as many of its constituents have overseas earnings, closed down 11.5 points, or 0.16pc, at 7,344.92.
On the commodity markets, Brent crude oil was steady at the close of London share trading, after registering its biggest-ever intraday spike on Monday after the attack on two Saudi Aramco facilities on Saturday. Despite an initial climb as investors worried about long-term damage to supply, oil prices steadied out during the week, finding a $65 a barrel shelf that was a still markedly higher than before the incident.
Gold, a bellwether for market sentiment as it is seen as a “safe haven” asset, ended the week just above the psychologically important $1,500 level, as a round of central bank easing in the middle of the week offset geopolitical worries over the Middle East.
Market Open
The yuan climbed with U.S. equity futures as investors monitored signs of progress in trade discussions between the two largest economies. The yen edged lower and stock futures pointed to a mixed start in Asia Monday. Japan is closed for a holiday. Investors will be watching this week: the U.K. Supreme Court may rule on the legality of Prime Minister Boris Johnson’s suspension of Parliament and U.S. GDP data is released. U.S. central bankers will be on parade including New York Fed President John Williams and St. Louis Fed President James Bullard. In Asia, there’s a Thailand rate decision Wednesday.
FTSE 100 Trading Signals, Forecast and Prediction
We tried to move above the 7373 resistance level on Friday but the FTSE 100 dropped back, weighed down by sterling and Brexit talk. Unfortunately just shy of the 7385 level. However the signs are positive for a push higher still and a test of the fib level at 7390, but more likely the R2 and daily resistance level at the 7404 to 7411 area. Its taken its time to rise though, with a few tests of the 7290 level but that seems to have held ok for the moment and a push up today looks likely. The 2 hour chart remains bullish from Friday, with coral support at the 7330 level, which held on the futures Friday night. With the pivot and also 200ema (30min) here then I am thinking that this level will hold this morning so any spike down to there is worth a long.
If the bulls were to break above the 7411 level then we could get to 7450 in fairly short order, to test the top of the 10 day Raff channel. The moving averages on the daily chart remain bullish and are showing support still at the 7290 area. Any dip to this area still looks to be worth a long.
If the bears were to break 7290 though then 7239 would likely be tested where we have the bottom of the 10d Raff channel. Thomas Cook has today joined the casualty list, burdened by debt as so many are, along with an outdated business model. The fall out will probably see a boost to their rivals share prices though in the perverse way the markets work! I think that should we get as low as the 7240 area then a decent bounce here looks likely.
The S&P is still hovering around the 3000 level and despite Friday evenings wobble to 7290 has fought back up. The daily support is at 2967 now and I think that we may well see a test of that rising support line at some point, for it to then spring higher.
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