7350 7367 7403 resistance | 7320 7265 7225 support | MP reject early election | Trade officials to meet

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

5th September 2019

The Bank of England making its worst-case Brexit scenario much less severe than first feared will grab the headlines but Mr Carney still struck a rather gloomy tone in his grilling from the Treasury Select Committee.

The peak-to-trough drop in GDP is now expected to be around 5.5pc in the Bank’s doomsday scenario, compared to its previous estimate of 8pc. On the current performance of the economy, he said: “The underlying pace is weak, slightly positive but close to zero.” He also believes that the global economy is struggling, saying that the trade tensions have “shifted into an actual trade war”.

Sterling hit fresh intraday highs on currency markets after MPs rejected the motion for an early election. Labour will not back a snap vote until the Brexit delay bill gains Royal Assent. The pound is finishing the day 1.4pc higher against the dollar at $1.2250, one of its best rallies this year.

Why the sudden jump in stocks? Three key risks that have been threatening to boil over have been calmed in the last 24 hours. First, MPs made a stride towards blocking a no-deal Brexit in Parliament last night. Second, tensions in Hong Kong have been dialed down by its leader Carrie Lam withdrawing the extradition bill. And finally in Italy, members of Five Star Movement approved its new coalition with the Democratic Party, meaning far-right leader Matteo Salvini will not get the chance to seize power in new elections.

Futures have risen overnight on news that U.S. and Chinese trade officials will meet early next month.That has seen the SP hit 2970, and the FTSE 100 up to the 7350 area. Just 7362ish area to beat now and the bulls are fully back in control.

Markets To Lift

Asian stocks headed for their biggest two-day gain since June, the yen dropped and the yuan advanced on news that U.S. and Chinese trade officials will meet early next month. Treasuries fell. The dollar dropped the most since June. Futures signaled gains for shares in Japan and Australia, and Hong Kong contracts pointed lower after a 4% surge Wednesday when Carrie Lam formally withdrew legislation to allow extraditions to China. U.S. stocks closed higher and Treasuries slipped. The pound surged as Britain’s parliament rejected Prime Minister Boris Johnson’s demand for an early election and took further steps to block an imminent no-deal Brexit. Meanwhile, China signaled that a reduction in the amount of funds banks have to hold in reserve is on the way. The calls come as more and more economists lower their GDP forecasts for 2020 to below 6%. Elsewhere, oil climbed above $56 a barrel.

Early Election Flops

Boris Johnson has suffered another blow to his questionable Brexit strategy — his third defeat in just 24 hours. The U.K. prime minister failed in his attempt to trigger a snap general election after fewer than half of Parliament supported him. He needed at least two-thirds of members to back him up. Speaking after the loss, Johnson blamed his rival, opposition Labour leader Jeremy Corbyn, for refusing to support the proposed election. “He does not think he will win,” Johnson said. The prime minister’s call for a snap poll came after MPs moved decisively to stop Britain lurching out of the European Union without an agreement in eight weeks’ time. The decision looks like it could painfully drag out the timeline yet again. Former PM Theresa May, who stood down earlier this year, faced criticism from MPs for continually kicking the Brexit can down the road, so to speak.

FTSE 100 Trading Signals, Forecast and Prediction

there is initial resistance at the 7365 area where we have the daily coral and the top of the 20d Raff channel, so the bulls will need to break above this today. Just prior to this we have the 7350 area with a key fib and the cam break out, and that has capped the futures rise so far.

Below the 7320 support area then the daily pivot at 7297 is next up, then a drop back down to 7260 below that. With the 200ema, S1 and a fib level here I would expect this to hold. all depends on cable and politics today though still. The S&P will be keen to hold onto its overnight gains.

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

Political games still afoot in London, after Jeremy Corbyn denied voters the chance to decide on the future of Brexit last night after ordering his MPs to block Boris Johnson’s bid for a snap election. A clearly frustrated PM ridiculed Mr Corbyn’s stance after the result was announced in the Commons, taunting that he was the first Opposition leader ‘in history’ to turn down the opportunity of a poll. But crucially, Mr Johnson did not give any indication of how he might now try to extricate himself from the impasse. Hows it all going to play out as the manoeuvring continues…..

So, fairly simple plan really for today, generally watching that 7320 level to se if it holds initially though we are nearing some strong resistance too at 7365ish and 7400.

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