FTSE 100 live outlook prediction analysis for 13th August 2020
Stocks in London shrugged off news that the UK economy tumbled into its deepest recession on record yesterday, with the FTSE 100 ending at a three-week high. London’s benchmark index pushed higher to 6,297 as every sector rallied, led by utilities, healthcare and energy companies.
A fall in the pound against the euro and the dollar also helped the London stock market to outshine its continental neighbours as investors bought into UK-based multinational companies earning much of their income in dollars. Losses for the pound were, however, limited by data showing growth of 8.7pc in June as the economy slowly emerged from lockdown.
Markets in Europe built on their gains from Tuesday with another positive session, with the FTSE 100 hitting its highest levels since July 23.
London’s benchmark index closed 2.2pc higher to 6,289.62 while the FTSE 250 rose 0.28pc to 18,047.78. The best performers today have been oil and gas stocks on the back of optimism over future demand while rising yields are feeding into a positive performance for banks and financials, with HSBC and Standard Chartered outperforming.
Yesterday’s summary:
- The British pound slipped against the euro, and to a lesser extent the dollar, as Britain’s coronavirus-ravaged economy slid into its deepest recession on record.
- The weakening currency helped the London stock market outshine its neighbours as investors bought into UK-based multinational companies earning much of their income in dollars.
- Britain’s economy shrank by a fifth in the second quarter, more than any European neighbour, and following two quarterly contractions in a row was officially in recession.
- Losses for the pound were, however, limited by data showing British GDP growth of 8.7 percent in June – the final month of the second quarter – as the economy slowly emerged from lockdown.
Apple Under Threat
Apple’s $44 billion China market is under threat after Donald Trump barred U.S. companies from doing business with WeChat, the super-app that has become integral to everyday life in the country. Scheduled to come into effect in roughly five weeks, the ban threatens to turn iPhones into expensive “electronic trash,” said Hong Kong resident Kenny Ou. If Apple is forced to remove WeChat from its global app stores, iPhone annual shipments will decline 25% to 30%, TF International Securities analyst Kuo Ming-chi estimated in a research note. But demand isn’t their only problem: Now, a key Apple supplier and a dozen other tech giants plans to split the supply chain between the Chinese market and the U.S., declaring that China’s time as factory to the world is finished because of the trade war. Meanwhile, as U.S. and Chinese negotiators plan to discuss progress of their trade deal in the coming days, Beijing will be pushing to widen the agenda to include Washington’s recent crackdown on businesses including TikTok and WeChat.[Bloomberg]
Golden Again
Gold rebounded Wednesday, extending a series of wild swings that saw the metal hit a record on Friday before plunging to below $1,900 an ounce. After surging about 30% this year, gold’s rally came to a sudden halt Tuesday as U.S. bond yields rose, cutting into the negative real rates that had supported the metal. A measure of gold volatility over the past month jumped to the highest since April, as U.S. equities traded higher on Wednesday — with the S&P 500 edging toward a record — helping limit gains for bullion. Despite the erratic movements lately, gold is still one of the best-performing commodities of 2020. But the metal may take time to regain momentum with investors spooked by the rout, according to Commerzbank.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Most Asian stocks advanced Thursday and the region was on course to erase this year’s declines as the global equity rally that’s driven shares higher since March continued to strengthen. The dollar weakened and Treasury yields ticked lower.
Shares in Japan saw the bulk of gains, with South Korea and China also higher. Hong Kong dipped, and Australian equities underperformed as earnings at some firms disappointed. S&P 500 futures were little changed after the benchmark momentarily topped its February high, capping the more than 50% rally since the lows in March. Gold resumed its advance.
The S&P dropped off the 3385 again yesterday though so far only as low as 3370 so far, which provably means the we are still on for a climb to the 3399 proper resistance. If they do get it that far a possible overshoot to hoover up some stops just above the round number may well play out. The 2 hour chart for the S&P is bullish with support at 3369 for now.
That may well see some more bullishness sort he FTSE though we had a bearish Australian market today, which may well follow through initially on the FTSE. I have plotted my preferred route in blue below, but also mindful that starting negative this morning may well see a drop down to the 6150 support level where we have S1 and the 200ema on the daily chart. The FTSE 100 rose yesterday with the divi and cable helping, but the FTSE 250 didnt move as much so still parts to be cautious with the longs. The pink arrows are plan B – the overnight weakness to continue down to that support level as we have bearish Moving Averages on the 10 and 30m charts to start with today.
If the bears were to break below 6150 then a slide down to 6054 may well pan out, with a possible bit of support at 6131 where we have the daily moving averages, and also the 2 hour coral line.
For the bulls, they will be keen to break above 6280. With the top of the 20 day Raff here and the area that we dropped off yesterday. That opens up a test of R1 at 6317 and potentially the top of the 10 day Raff at 6340. That may well then tie in with he S&P testing the 3399 (or slightly higher) level. Low volume August chop certainly continuing at the moment!
So, looking at 6150, 6137, 6054 as the supports, with 6280, 6317 and 6340 as the main resistance levels today.
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