FTSE 100 live outlook prediction analysis for 25th January 2021
Focus was firmly set on a string of dire economic data on Friday alongside concerns of a longer-than-expected lockdown and harsher travel restrictions – triggering a broad sell off in markets and a slip up in the pound’s recent rally.
A flash reading of activity in the UK services sector for January came in at 38.8, the lowest in eight months and far below the 50 mark that indicates expansion. Services account for roughly 80pc of the nation’s output.
Meanwhile, retail sales last year fell the largest amount on record, by 1.9pc. Public sector borrowing rose to £34.1bn last month – just above forecasts. It has reached a record £270.8bn since the start of the financial year last April. Retail stocks stumbled in reaction to the bearish news. Next was among the largest fallers on the benchmark, dropping 244p to £79.14. The brand also pulled out of its bid for Topshop on Thursday night. Others, including JD Sports and Primark owner Associated British Foods, also fell.
In an indication of dimmed sentiment, the domestically focused FTSE 250 lost 196.81 points to close at 20,596.91, as the majority of its constituents ended in red, while the FTSE 100 fell 20.35 points to 6,695.07. The benchmark’s losses were somewhat cushioned by a weak sterling. It lost 0.38pc against the dollar to $1.368 and was down 0.47pc against the euro at €1.123.
Tough Start
The world economy is facing a tougher start to 2021 than expected as coronavirus infections surge and it takes time to roll out vaccinations.
While global growth is still on course to rebound quickly from the recession of last year at some point, it may take longer to ignite and not be as healthy as previously forecast. Double-dip recessions are now expected in Japan, the euro area and the U.K. as restrictions to curb the virus’s spread are enforced, while Record cases in the U.S. are dragging on retail spending and hiring. Only China has managed a V-shaped recovery after containing the disease early, but even there consumers remain wary with Beijing partly locked down.[Bloomberg]
US & Asia Overnight from Bloomberg
Asian stocks, U.S. and European equity futures rose Monday as investors focused on the prospect of additional fiscal stimulus and supportive Federal Reserve policy amid the worsening pandemic. The dollar dipped.
Stocks outperformed in South Korea and Hong Kong though Japanese shares were little changed. U.S. futures pointed higher, with Nasdaq 100 contracts leading gains ahead of a slew of tech earnings reports this week. The S&P 500 slipped Friday on sobering virus trends. Treasury yields edged up.
Hong Kong’s stock market was boosted by a surge in Tencent Holdings Ltd. The Internet giant has become a prime target for traders from mainland China who are flooding record amounts of cash into Hong Kong-listed shares this year.
Global stocks are close to all-time highs as expansive stimulus assuages concerns stemming from additional coronavirus lockdowns and the patchy rollout of vaccines, which has led to a tougher start for the world economy in 2021 than earlier expected.
U.S. lawmakers are sparring over President Joe Biden’s proposed $1.9 trillion Covid-19 relief plan but investors continue to expect some additional spending to materialize eventually. Traders are also hoping Fed Chair Jerome Powell will provide reassurance after Wednesday’s policy meeting that $120 billion of monthly bond purchases won’t be tapered any time soon.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Decent gap up on the S&P futures following a bit of a decline on Friday, and its back around the 3860 resistance level. As such, we may well see a bit of consolidation today and a possible dip down to close that gap at 3838 and another test of the 2 hour coral line before a climb towards the 3900 level. If so then we should see a dip and rise play out for the FTSE today as well, which is hovering around the 6700 area quite nicely at the moment.
With the drop on Friday the 2 hour chart has gone bearish and we have initial resistance at the 6722 level with the red coral here on the 2h chart. This is also the 200ema on the 30min and just below R1 at 6730. We also have the key fib just above these at 6740 so a cluster of resistance levels fairly close by to start with today. As that coincides with the S&P resistance around the 3860 we may well see a bit of a dip from here down towards the 6690 level initially where we have the green 30m coral, and also the daily pivot. Below this then I would be looking for a retest of Fridays low at 6650, and a possible test of the daily support at 6630 – the first test of the daily coral since it went green.
Above the 6740 level then the bulls will be looking at R2 at 6770 and also the recent high in this area from Thursday. Above this then the top of the 10 day Raff channel at 6800 but may stop just shy – not sure we can get that high today unless the bulls really go for it though and prefer more of a consolidation day to play out.
For the bears, then a break of the 6625 level would get things quite bearish and we will get the drop down for the next few weeks playing out I think. S3 is at 6572 for today though again, I can’t see us getting to these outer extremes and dropping that low today. The bulls will certainly want to defend the 6625 to 6650 area I would expect.
So, looking at the 6725ish area as key resistance to start with and then 6770 above that. With 6690 and 6650 as the main support. Good luck today.
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