FTSE 100 live outlook prediction analysis for 13th July 2020
Friday recap:
Chinese stocks dipped on Friday, breaking a trillion-dollar rally that had sparked concerns of a new equity bubble. The Shenzen-Shanghai composite CSI 300 index dropped 1.8pc as government-controlled funds announced plans to trim their stock holdings, and state media warned about the dangers of a “mad” bull market. China’s performance created a nervous mood at the European open, but equities shook off their early falls to slowly build up during the day, against a backdrop of continued easing of restrictions across the Continent. There were still signs of a risk-off mood, however: bond yields on UK two and five-year bonds dropped to record lows amid high demand (yields move inversely to prices), although gold prices slipped. Major individual moves were limited among thin Friday reporting flows.
Cases Keep Rising
U.S. virus cases rose to 3.27 million with almost 56,000 new infections, less than the one-week average daily increase. Even so, Florida reported more than 15,000 cases, the biggest daily increase of any state since the coronavirus pandemic began. Florida’s count exceeded records in New York, California and Texas, each of which has peaked at almost 12,000 daily cases so far. U.S. Education Secretary Betsy DeVos said “the rule should be that kids go back to school this fall.” Meanwhile, one of U.S. President Donald Trump’s coronavirus task force members said that infectious disease specialist Anthony Fauci doesn’t necessarily “have the whole national interest in mind” in suggesting responses to the pandemic, reflecting tension in the administration before the November election. South Africa introduced a curfew and a booze ban after virus rules went unheeded. [Bloomberg]
Market Open
Asian stocks were set to gain on Monday as investors looked to the start of earnings season on Wall Street for further clues on how companies are planning for the future. S&P 500 futures opened firmer. Currency markets saw muted moves in early trading, while futures on Asia-Pacific stock indexes were higher. Banks — which kick off the reporting season this week — led the S&P 500 up on Friday, when Treasuries reversed a gain that had pushed the five-year yield to a record low. Oil was little changed. Global equities are trading near the highest since before the market swoon in late February. As governments gradually ease coronavirus shutdowns to revive growth, new outbreaks are causing further restrictions and leading some investors to wind back their expectations on the pace of recovery. Meanwhile, China will this week have a clearer picture of its progress on nursing the economy back to health when it reports second-quarter GDP on Thursday, along with monthly readings for industrial output and retail sales. [Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Asian stocks climbed on Monday together with U.S. and European equity futures ahead of the start of an earnings season that will provide more clues on how companies are coping with the pandemic. The dollar slipped.
After a fairly lacklustre past week on the FTSE the daily chart has gone bearish with resistance at 6178 to start with today. We are also going into earnings season this week so it will be interesting to gauge how hard companies have been impacted by the virus. Asia had a bullish session Monday while the ASX200 slipped for most of theirs, though has had a kick up towards the close.
I have gone for an initial rise towards that 6185 and daily resistance level this morning for us, and it will be interesting to see if we get a reaction here. Its been a decent bounce from 5995 on Friday (just missed the 5990 of course) and we may well see some profit taking ahead of the earnings. That said, with the rise on Friday we have a bullish 2 hour chart with support at 6083 for the moment, and also the daily pivot and 30min coral lending support at this area. As such any dip down to this area looks to be worth a long as I expect we may well have a choppy week coming up.
If the bulls break above the 6185 level (and we get a decent bull Monday in the end today) then we may well remain on track for a test of the top of the 10 day Raff channel soon which is at 6305, and not far off the recent high from last week at 6321. That said we do also have R1 initially at 6182 as well so this area will be key to start with this week. Above the 6185 then we have R2 at 6230 which would be the next likely target for the bulls, above 6185. Looking at the S&P we have resistance at 3229 next up and then 3266 above that. We may well see a reaction at the 3230 in that case, and a bit of a bearish reaction there, to drop down to test the 2 hour support at 3162.
For the FTSE bears, if we were to break below that 6090 level then 6040 is next up where we have the key fib level. Below that then 5990 area still looks relevant though 5995 is obviously Fridays low as well. The bulls are certainly going to want to defend another test of the 6000 level and I would expect a double bottom bounce here. I don’t think we will drop that low today but you never know.
Todays news on the virus is that people who have recovered from Covid-19 may lose their immunity to the disease within months, according to research suggesting the virus could reinfect people year after year, like common colds. That will weigh on the markets as it lends weight to the second wave fears once the weather cools and we go back into Flu season. Hong Kong closed all their schools as of today as well. Secondary and primary schools as well as kindergartens would be suspended starting on Monday, said Kevin Yeung, education secretary. The decision was taken “in view of the exponential growth of confirmed Covid-19 local cases over the past two days”, he said last week.
So looking at the 6185, 6230 and 6300 levels as the main resistance ones for today. 6090 to 6080 as the support zone, with 6040 below that. Good luck today.
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