Bull Monday for a rise towards 7390 7405 | Last week best of 2019 | Poor jobs data rate cuts | Live trading room

Markets rattled by trade again | SPX finally drops | 7240 7197 support | 7355 resistance

10th June 2019

Global markets enjoyed their best week of 2019 last week after stocks surged on hopes of central bank support following a shock slowdown in the US labour market. Expectations of interest rate cuts at the Federal Reserve were fuelled by just 75,000 jobs being added to the US economy in May, well below the 175,000 predicted by economists in one of the worst readings in recent years.

The yield on US government debt tumbled as investors brace for a sudden shift in central bank policy to tackle an economic slowdown. Markets are now pricing in at least three rate cuts at the Fed before the end of the year.

The FTSE 100 jumped 1pc in its strongest weekly gain in four months as US stocks extended their rally. The S&P 500 climbed as much as 1.5pc in intraday trade as the dollar sank on currency markets.

Meanwhile, cutting interest rates to below zero does work to stimulate the economy, the European Central Bank has concluded, opening the way for deeper negative rates in any future recession In a challenge to the conventional view that interest rates cannot fall below zero without chasing money out of the banking system, the ECB found banks can charge a negative interest rate to big businesses, which encourages companies to spend and invest.

Mexican Deal

President Donald Trump announced late Friday that he wouldn’t impose a sliding scale of tariffs on goods from Mexico — from 5% to 25% over time — after that nation agreed to take a tougher stance on immigration, which was his goal all along. Trump on Saturday tweeted that Mexico will also buy “large quantities” of agricultural products, a stipulation that wasn’t included in a joint statement. The peso climbed. However, three Mexican officials said they were unaware of a side accord in the works, and that agricultural trade hadn’t been discussed during three days of negotiations in Washington.

G-20 Warning

The G-20 warned of escalating hazards from trade and geopolitical tensions. Finance ministers and central bank governors meeting in Japan made little progress in addressing the main threat of tit-for-tat tariffs, noting that while growth appears to be stabilizing, it “remains low and risks remain tilted to the downside.”

Market Boost

Asia stocks gained Monday and U.S. equity futures climbed after President Donald Trump suspended his plans for tariffs on Mexico. The yen retreated. Futures pointed higher in Australia and Japan, though slipped in Hong Kong. The dollar steadied. U.S. shares closed higher and Treasury yields dropped Friday after weak U.S. jobs data added to speculation the Federal Reserve will ease rates. Oil climbed.

FTSE 100 Trading Signals, Forecast and Prediction

And the worm has turned again with the week closing strongly last week and the general news flow turning more positive once again. The poor US jobs data was shrugged off once again using the rate cuts as an excuse to rally. That has all followed through into today’s futures and we look to be on track to now test the 7390 resistance area where we have a red daily coral to act as resistance. The moving averages on the daily are still bearish but if the bulls can hold it above 7281 for a couple of sessions I expect we may well see then go bullish again, and support lock in around the 7300 level.

FTSE 100 Trading Signals, Forecast and Prediction
FTSE 100 Trading Signals, Forecast and Prediction

For today I am watching that 7390-7400 area as initial resistance. Above that then we have R3 at 7461 but I am thinking that we may see a decent reaction at that 7390 area. It would certainly be a decent point to take profit for those longs that have held since 7080 on the fake break of 7100. We also have the top of both the Raff channels at 7405. The bulls will need a concerted effort to push past this today, however a break is probably worth going long on (a break for me being a 30min candle close above that resistance).

On the support side of things for today I am looking at 7320 initially. We have the daily pivot here but also the rising moving average on the 2 hour chart that we nearly tested the other day at 7140, but haven’t had a proper test of it yet. Below this then 7250 is the 2 hour coral line, however 7270 has both the fib level and also the 200ema on the 30min chart, so may well be stronger support. The bulls will certainly be looking to build on last weeks ending strength though, but once we start getting near the top of the Raff channels we may well see a bit of a pullback.

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