16th July 2019
Stocks in Europe closed in a sea of green as Chinese economic growth reached its slowest rate in 27 years.
The benchmark FTSE 100 closed 0.34pc up at 7,531.72 while the FTSE 250 rose 0.17pc to 19,584.14. The DAX climbed 0.52pc, ending at 12,387.34 points and the Paris CAC 40 was 0.10pc higher to 5,578.21.
China’s economy grew by 6.2pc in the seconds-quarter, which was bang in line with forecasts. The retail sales, industrial production and fixed asset investment reports all exceeded forecasts, and showed improvement on their respective previous readings, so the various stimulus packages from Beijing are paying off.
Trade deal
The U.S. president again asserted that Beijing wants to make a deal on trade, pointing to China’s slower growth in the second quarter, the weakest since regular data began in 1992. The president tweeted that this shows firms are leaving for non-tariffed countries. Treasury Secretary Steven Mnuchin said he and Trade Representative Robert Lighthizer expect to speak by phone with Chinese officials this week about negotiations. Economic adviser Larry Kudlow hinted that agricultural purchases would help talks advance.
Mixed Markets
Asian equity futures are narrowly mixed. A technology rally drove U.S stocks to fresh records at the start of a busy week for corporate earnings, economic data and Fed speakers. Treasuries advanced, with 10-year yields down more than three basis points. The dollar rose against the pound and loonie but dropped against the kiwi and Aussie. Oil and gold both retreated.
FTSE 100 Trading Signals, Forecast and Prediction
I am still running half of the gold long from 1409 from yesterday and the stop is at breakeven on the rest. It has held up well overnight so we may see some more upside, especially if indices weaken a bit today for a bear Tuesday. The ASX200 was relatively flat today but weakness is creeping in during the closing stages and we may well see something similar. The Bulls failed to really push on past the 7550 level yesterday though we have only dropped back as far at 7530 so there is still a bit of strength there. With the bulls holding on yesterday the 2 hour chart has gone bullish again with support at 7514 for today.
The daily chart remains bullish too with support at the 7474 level from both the 25ema and the bottom of the 20 day Raff channel there, so if we were to drop down to this level then we may well see a bounce here. Below this then we are still looking at the 7425 level as the next support.
The 30min chart has support at the 7529 level to start with today where we have the green coral line and as such we may well see a push towards the 7558 resistance level. However, 7580 is still also showing as resistance and we have a fib level at 7576 as well, so I have put the pink arrow on the chart below for a possible route to this one. I am watching that 7558 level closely. as a break of that will likely see 7580. Above this then 7622 is also showing still as resistance. I have put a pretty tight stop on my short at 7557, however you may want to widen that yourself, or go smaller stakes and fade in shorts at 7557, 7580 and 7620 if it were to be seen today. I am not sure that we will push that high, but as we progress into earnings season then you never know.
It’s eyes on rate cuts and the Fed still and whether the data will force their hand at the moment. With Chinese data yesterday not being too negative I am thinking they will still adopt a wait and see stance. Cable has had a good run up from the 12450 level but has now stalled a bit, and the drop back has helped to keep the FTSE bullish. There is still potential for a rise towards 12600 and if so then that may well weigh on the FTSE 100 for a drop down to the 7480 support area.
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