FTSE 100 live outlook prediction analysis for 7th September 2020
Here is a recap of Friday:
- Tech stocks on Wall Street sell off heavily
- US non-farm payrolls back at 2014 levels – the Labor Department’s closely watched employment report showed jobless rate fell to 8.4pc from 10.2pc in July, steeper than economists’ forecast of 9.8pc.
- Nonfarm payrolls, however, increased less than expected last month.
- The data added pressure on the White House and Congress to restart stalled negotiations over the next coronavirus relief package to lift the economy out of the worst recession since the Great Depression.
- European equity markets slip thanks to tech-led declines in the US
- Rishi Sunak poised to reject banks’ appeal for help collecting Covid debts
- UK construction PMI misses estimates
- BoE’s Saunders sounds warning over economic recovery
Wall Street stocks were solidly lower Friday, with tech shares again tumbling, shrugging off data showing the US unemployment rate dropping much more than expected in August.
The jobless rate fell to 8.4pc, the first reading below 10pc since the pandemic struck, while the economy added 1.4m jobs last month, the Labor Department report showed. But stocks remained under pressure following a series of records in August, with Amazon, Facebook and other tech giants losing more than 3pc.
European equity markets were pulled into the red by tech-led declines in the US, with the FTSE 100 closing 0.89pc lower.
Rattled Markets
Stocks were heading for a cautious start on Monday after the biggest two-day slide for global equities since June left investors on edge. Currencies began the week with little fanfare. S&P 500 and Nasdaq 100 futures started the week little changed with U.S. markets shut Monday for a holiday after the worst week for the Nasdaq since March. Futures signaled a muted open in Japan and Hong Kong. The dollar was steady in early foreign-exchange trading, while the euro ticked higher. Oil opened weaker. Volatility remains elevated for equities as investors continue to chart the path for the global economy with the pandemic. Federal Reserve Chairman Jerome Powell responded to Friday’s U.S. employment data positively, but reiterated his view that the economic recovery has a long road ahead and that interest rates will remain low for a while. One big event later this week is the European Central Bank’s policy meeting.
Concerns
The world economy’s rebound from the depths of the coronavirus crisis is fading, setting up an uncertain finish to the year. The concerns are multiple. The coming northern winter may trigger another wave of the virus as the wait for a vaccine continues. Government support for furloughed workers and bank moratoriums on loan repayments are set to expire. Strains between the U.S. and China could get worse in the run-up to November’s presidential election, and undermine business confidence. “We have seen peak rebound,” Joachim Fels, global economic adviser at PIMCO, told Bloomberg Television.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Global stocks mostly stabilized Monday though investors remained on edge after the biggest two-day slide for shares since June. The dollar edged higher and crude oil extended its recent slide.
Shares dipped in Japan and China, and climbed in South Korea. Stocks fluctuated in Hong Kong, where protests again flared up on Sunday. U.S. futures pared earlier losses, while European contracts pointed to solid gains. U.S. markets are shut Monday for a holiday after the worst week for the Nasdaq since March. Treasury futures were flat after a slide in bonds on Friday, a move which Australian debt tracked on Monday.
NFP Friday delivered its usual volatility last week, and the bulls defended the drops, as the S&P continued its slide. That said the 3350 level was defended, and as such we may have seen enough of the retail bulls capitulate at that level as they start to throw in the towel. The market needs to punish the Robinhood traders (and other retail longs) who think that stocks only go up and get their money flowing back into the big players. Once its squeezed enough then we can resume the rally ahead of the year end/election rally. Ironically the FTSE 100 has only dropped 200 off its recent high while the US has taken a bit more of a battering – mainly as the FTSE 100 has been front running and didn’t rise as strongly in previous weeks. Dollar has helped also.
Talk of the second wave ramping up for the UK as cases climb. However, it’s the death rate thats relevant, and that remains low. Those that feel they are at risk continue to be extra cautious so the death rate should remain low, at least for the moment.
For the FTSE today, we have initial support at the 5830 level with the daily pivot here and also the coral line here on the 30min. We should be on for a bull Monday, and another push to the 5905 level. If so this would be the third test of that resistance level and therefore likely to break. If so then we should get a push up towards the 5950 daily resistance level, and that is also just below the 10 day Raff at 5960. As such, should we see this level then a short here looks to be worth a go. Above this level then a retest of the 6000 round number, and then we would be looking at the 6060 level again, coincidentally where we have the top of the 20 day Raff channel for the moment.
For the bears, should they take it below the 5830 level today, then 5794 is the key fib for today, then S1 at 5762. Below that then I am looking at a support just above the 5700 level, around 5713ish. I don’t think we will get that low today, and am expecting a bit of a climb overall. The US is closed today for a public holiday, so we may just see a slow drift up on the S&P.
So, mildly optimistic for a bull Monday today, and looking at the 5905, 5950 levels for resistance. 5830, 5795 and 5762 as the main supports. Good luck today.
Recommended Broker
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership and Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below
[yikes-mailchimp form=”4″]