14th November 2018
That was a decent drop yesterday from the 7100 level despite the fact that US-China trade talks were back on the agenda. The FTSE 100 trailed behind rivals in a rebound in global stocks as a record slump in oil prices gathered pace and the pound surged on hopes of a Brexit breakthrough. Global benchmark Brent crude finished trading in London below $70 per barrel for the first time in seven months after the market was rattled by Donald Trump urging Opec to abandon plans to cut production.
The U.S. and China have resumed contact “at all levels” over trade ahead of a planned meeting between Presidents Donald Trump and Xi Jinping, White House economic adviser Larry Kudlow said. There’s no certainty that China will cede to U.S. demands in trade negotiations, but “it’s better to talk than to not talk,” Kudlow said in an interview on CNBC Tuesday. A top Chinese negotiator, Liu He, will probably visit Washington shortly to advance “some informal talks,” Commerce Secretary Wilbur Ross said at a conference. Separately, Singaporean Prime Minister Lee Hsien Loong opened the Association of South Asian Nations summit with a warning that seemed directed at Trump’s “America First” policies, even if he mentioned no names. “Countries, including major powers, are resorting to unilateral actions and bilateral deals and even explicitly repudiating multilateral approaches and institutions,” Lee told a crowd that included leaders from all 10 Asean members.
Oil’s unprecedented decline deepened as investors fled a market hammered by swelling excess supplies, a darkening demand outlook and Trump’s Twitter critique of the world’s biggest crude exporter. Futures plunged about 7 percent in New York on Tuesday for the biggest one-day drop in three years. OPEC’s dire forecast for 2019 demand came at a time of steadily rising American production and stockpiles. Meanwhile, Trump’s Twitter critique of Saudi Arabia’s plan to curb output may dissuade other cartel members from similar moves, given the influence his past comments have had on OPEC actions.
The U.K. and the European Union have agreed on a draft divorce deal. Now Prime Minister Theresa May puts it to her Cabinet, who have to decide whether to back it or resign. Negotiators have settled on a text after working through the night this week in Brussels, according to three people familiar with the situation. May’s ministers have started filing into her office to read it and are due to meet Wednesday at 2 p.m. to sign off. EU officials cautioned that the deal isn’t done until it gets political sign-off in London. While the pound rose on this breakthrough — talks had been at impasse for months — there are more obstacles ahead. Cabinet is the first hurdle, but her hardest task will be to force it through the House of Commons, where the arithmetic is looking increasingly challenging.
Looking ahead to today, highlights include German and Eurozone flash GDP, Swedish, UK and US CPI, Fed’s Quarles, Powell, Supply from Germany and UK cabinet to meet to discuss Brexit deal
FTSE 100 Trading Signals, Forecast and Prediction
Today’s FTSE action is probably going to be driven by the Brexit deal news and the cabinets reaction. From a technical point of view we are nearly at the 7010 level I had for yesterday and as we bounced well just above it at 7015 it looks to still be valid and as such worth a long again.
The ASX200 (Australia) had a very bearish Wednesday and the oil price continues to slide (which weighed the FTSE down yesterday as the oil majors slid. FTSE futures have held up well though. If the bears were to break the 7010 level then the next support of note is 6972/6976 which may well see a hold. However, that break of 7000 might prove key and put the bears in control for the next few sessions. On the flip side the bulls will be keen to hold above the 7000 level.
As such, I am cautiously (brave maybe?) long at 7010 for a possible climb today. It almost seems to too obvious for it to tank today and as such might want to suck some bears in. But that said I am watching the 7010 level closely. If the bears break S2 at 6972 then 6928 is S3 and the bottom of the 20d Raff – a level that really needs to be defended!
If the bulls do pull away from 7010 then I’m looking at 7079 as the first key level where we have the 200ema on the 30min, and then possibly as far up at 7114 where we have the key fib resistance. We also have a 16.1 dividend today, so bear that in mind. It may well underpin the bulls later in the session, and obviously will affect open positions on the daily contracts.
It really be all about that Brexit deal today though and the effect on cable, and then the follow though from both of them onto the FTSE 100. Might even be worth doing lower stakes today.
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