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Asian stocks rose along with U.S. and European equity futures Monday, aided by signs that China may take steps to boost its economy. The pound fell on an omicron warning from U.K. Prime Minister Boris Johnson.
MSCI Inc.’s Asia-Pacific share gauge advanced for the fourth session in five, with China outperforming. The nation’s top decision makers last week signaled policies may become more supportive of growth next year. Economists predict China will start adding fiscal stimulus in early 2022. Oil and iron ore rallied.
S&P 500, Nasdaq 100 and European futures climbed. U.S. shares closed at a record Friday after an inflation print that was high but in line with predictions.
The Federal Reserve on Wednesday is expected to speed up stimulus withdrawal, and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. U.S. Treasury yields edged up, taking the 10-year rate toward 1.50%. The dollar pushed higher.
Sterling
Markets have become the most bearish on sterling in more than two years after traders built short bets against the pound amid omicron fears and expectations that the Bank of England will not raise rates next week. Net positioning on sterling is the most negative since the Brexit tumult of October 2019, with traders rapidly building up short positions against the currency.
The pound hit a 12-month low in recent days last week as the latest Covid variant prompted the Government to re-introduce some restrictions in England.
The triggering of “Plan B” dashed predictions the Bank will increase interest rates on Thursday.
Economists are overwhelmingly guessing against an increase, with just six of the 34 predictions published since Boris Johnson announced the new rules estimating rates will go up to 0.25pc. Meanwhile, markets were pricing in a 30pc chance of an increase on Friday.
Omicron
Prime Minister Boris Johnson warned the U.K. is facing a “tidal wave” of omicron infections and set an end-of-year deadline for the country’s booster vaccination program. Infections in the U.K. from the new variant doubled in one day and now make up a third of new cases in London. Elsewhere, South African studies show a two-shot course of Pfizer’s vaccine may have just 22.5% efficacy against symptomatic infection with the omicron variant, but can thwart severe disease; omicron cases in the U.S. among the vaccinated have proved to be mild; South African President Cyril Ramaphosa tested positive for Covid-19
FTSE 100 live outlook prediction analysis for 13th December 2021
So despite the doom and gloom emanating from the government about the Omicron variant and the move to level 4 restrictions, things have started positive already on the markets. The S&P500 has gaped up above the 4720 resistance level, and the FTSE has held on above 7300 having tested that daily support level of 7280 on Friday.
This week has the big Fed news on Wednesday so we may well drift a bit today and tomorrow, and a rise today towards the 7360 area would make sense before a drop back from there. The FTSE100 daily chart has gone bullish again and has good moving average support at the 7243 level currently so any dip down towards 7250 this week may well see some further buying kick in there.
This week is the last full trading week as we have Christmas Eve next Friday and likely reduced activity so a dip and rise this week may play out for another bit of a Santa Rally. The 2h chart remains bearish though to start with, and the bulls will need to break above the 7365 Hull moving average. Will we get that 7500 year end after all?
The Omicron fears have subsided if you look at the markets though moving to Level 4 may be indicative of more measures in the New Year. Will we get a lock down!? Will upset those that have been vaccinated if so….
So, initially I am looking at the bulls to start on the front foot and a rise towards that 4750 level on the S&P and the 7365 level on the FTSE100. On the FTSE, above that then 7382 is R3 and would be the next level of note, with the round number of 7400 above that. We are a fair way off the top of the Raff channels at the moment (20 day is the closest one but at 7468) so I dont think we will testing them just yet, though the 10 day channel is once again heading upwards.
For the FTSE10 bears, the first support level is 7300 with a cluster of supports here that they would be looking to break, and the bulls to defend. Daily pivot, 200ema and 30m coral are all in this zone so we may well see that defended. A break of 7295 and then a slide down to the 7265 key fib looks likely as they may well have the momentum to break Fridays 7280 support level. Lower down then the 7240 area is the key daily support and may well see a bounce here. Worth taking a long here if seen.
So, could see a rise and dip play out today with the S&P bulls keen to build on this early strength and that should pull the FTSE100 up with it, especially while GBPUSD (cable) is steadily dropping.
Good luck today.
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