18th June 2019
Airline shares have suffered turbulent trading after German giant Lufthansa issued a shock profit warning, admitting that its short-haul business had been hit by fierce competition. Shares in easyJet and British Airways owner IAG dragged the FTSE 100 into the red after Lufthansa revealed that its margins had been squeezed by its low-cost rivals and surging fuel costs.
More than £800m was wiped off the German company’s market value as its shares tumbled 11pc following the warning released on Sunday evening. Lufthansa said that other budget carriers have been “willing to accept significant losses to expand their market share”, impacting its short-haul European business, particularly in Germany and Austria.
The wider index reversed losses to close in positive territory, up 0.2pc, as the pound hit its lowest level since early January amid fears that the risk of a no deal Brexit is rising as frontrunner Boris Johnson extends his lead in the Conservative leadership race.
Tech Leads
Asian stocks were set for a muted start Tuesday as traders bided their time ahead of this week’s key Federal Reserve decision. The dollar and Treasuries were little changed. Futures in Japan and Australia were flat after the S&P 500 Index closed little changed. The Nasdaq 100 posted a modest gain as technology shares outperformed. Crude oil declined and gold also lost ground.
FTSE 100 Trading Signals, Forecast and Prediction
Yesterday was pretty flat on the markets ahead of the Fed tomorrow and today might well be a bit moire of the same. The 2 hour FTSE 100 chart has gone bullish though after the rise from 7325 yesterday to back above the 7360 area, and is now showing support at the 7361 level to start with. Once again we also have the pivot, 30min coral and the 200ema on the 30min all showing support at this level. Despite a lacklustre initial move off this area yesterday it does look decent support again today. If it were to hold then we should get a rise towards the 7390 resistance level. Above this then we still have the daily resistance at 7420 and this level still looks to be worth a short.
Should the bulls break above 7420 then 7470 is the next level of note, however, the longer term timeframe formulas are now showing a possible change of trend brewing for a test o support down at 7152. Ergo I am watching the 7420 level closely, as a decent bearish reaction here may well see a decent drop. The daily chart has support at 7315 so a drop down to here from 7420 would make sense, though if the bears were to break below this level then that does bring that 7150 into play.
For today I am thinking that we may well see a slow rise towards the 7390 and 7420 levels, loosely following the ASX200’s move today. That said the S&P has failed to regain any ground above 2900 for the moment, but does have daily support at 2860. If that were to hold then we may well see a rise towards that 2910 resistance mentioned yesterday.
Whilst the 2 hour chart has support at 7361, it also has coral resistance at 7377, so a very tight range to start with today between some key levels. Will be a bit of a battle ground first thing I expect! We also have the next round of Tory leadership voting today, still looks like it will be between Boris and Rory as mentioned last week.
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