FTSE 100 live outlook prediction analysis for 4th March 2021
Rishi Sunak has warned the total cost of Britain’s coronavirus response will reach £407bn by the end of next year, as he announced tax hikes to help pay down the UK soaring debts. The Chancellor unveiled an extra £65bn in spending in his Budget, including an extension of the furlough scheme to September and a number of other relief measures. But warning there is a price to pay for the Government’s huge spending spree, he announced tax on the biggest corporations will rise to 25pc by the end of 2023, and announced a freeze to income tax thresholds – meaning many Britons will pay more from 2022 onwards.
In markets, the domestically focused FTSE 250 index closed at its highest level in almost a year on Wednesday, coming within touching distance of clawing back losses since the pandemic hit. It added 258.4 points to 21,436.3, its highest since Feb 15 2020, as traders welcomed much of Rishi Sunak’s latest financial support. Stocks calmed in the afternoon to close behind morning highs after caution in US markets weighed. The FTSE 100 added a slim 61.7 points to finish at 21,436.3. Housebuilders were some of the stand-out winners of the day, lifting the benchmark gauge after the Chancellor confirmed a stamp duty extension and new 5pc deposit guarantee scheme.
Stock Selloff
Asia traders brace for a renewed bout of stock and bond volatility after a surge in Treasury yields once more dragged down U.S. shares. The dollar strengthened. Futures in Japan, Hong Kong and Australia pointed lower after the Nasdaq 100 slumped to a two-month low and the S&P 500 extended its slide into a second day. A selloff in high-flying giants such as Apple and Amazon outweighed gains in banks and energy producers. Australian bonds slumped after benchmark Treasury yields approached 1.5%, and a market gauge of inflation expectations over the next five years hit its highest level since 2008. Oil surged.
All Eyes on China
China kicks off its biggest political meeting of the year Friday, laying out plans that could propel the economy to become the world’s biggest this decade. After powering its way out of the pandemic last year, policy makers must engineer an exit from the monetary and fiscal stimulus that fueled that recovery, without destabilizing growth and spooking investors already wary of corporate defaults. It’s growth target, focus on tech and overhaul of Hong Kong’s election rules are just three things under the microscope.[Bloomberg]
US & Asia Overnight from Bloomberg
China led Asian stocks lower and U.S. futures declined Thursday after a surge in sovereign bond yields reignited concerns about valuations. Treasuries held those losses.
MSCI Inc.’s Asia-Pacific gauge suffered its worst loss this week with China and Hong Kong bearing the brunt of the selloff. The technology sector struggled while real estate, finance and energy shares outperformed as part of a global shift to value segments. S&P 500 and Nasdaq 100 futures dipped after a slump in the indexes took the tech-heavy gauge to a two-month low. European contracts slid.
Australian bonds tumbled after benchmark Treasury yields approached 1.5% in U.S. trading. A market gauge of inflation expectations over the next five years hit its highest level since 2008.
The rise in inflation expectations and long-term borrowing costs is stoking concern that the prolonged rally in equity markets may be in jeopardy. Investors are trying to assess central banks’ appetite to buy more longer-dated bonds to keep financial conditions loose. The focus turns to Federal Reserve Chairman Jerome Powell’s upcoming comments, after Chicago Fed President Charles Evans said the recent climb in yields reflected economic optimism.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Some weakness creeping into the S&P now, after far too many calling for 4000 on the recent rise. The bulls though really need to defend today and the 3764 S1 level looks fairly key to start with.
The FTSE100 has held up pretty well despite the S&P dropping yesterday, and looks like it wants to defend the 6600 level, at least initially. We have a green 2h coral line here which should help the bulls and we may well get an initial kick up this morning.
Below the 6600 level then the 6565 level is the next major support where we have S1 and also a key fib line. I would like to see this hold if the bulls are going to get any further upside, otherwise the short term high will be in at 6700 (nice catch that yesterday with the short!). Should the bears break below the 6565 level then 6530 and 6462 are the ones to watch, with the bottom of the Raff channels at the 6450 area hopefully holding. March is notoriously weak, and we may well see a bit of a pull back in Q1 (mostly on the US markets) before we start climbing again.
For the bulls, initial resistance is at the daily pivot at 6636, with the better looking 6646 above that where we have R1 and the key fib line. Above this R1 is at 6670 but I would like to see a rise to 6645, then a drop down to the support at 6565 before more upside today to fit the pattern really. We got the rise dip rise yesterday and might well see a similar pattern today.
So, the ball is firmly in the bulls court today and they will need to defend, especially the S&P and the 3765 area, if it gets that low.
Good luck today.
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