FTSE 100 live outlook prediction analysis for 10th May 2021
The FTSE 100 reached its highest level since before the pandemic hit Britain, as miners and other stocks benefited from renewed optimism around the global recovery. London’s mid-cap index, meanwhile, hit record levels.
Copper prices, seen as a major indicator of the global economy, surged to an all-time high above $10,300 (£7,362) per ton yesterday, pushing miners higher and propelling the indices. The metal passed a previous peak set in 2011, at the height of a former commodities boom.
Commodity markets are rallying on expectation of a recovery as major global economies reopen, and as demand grows for materials needed in the move towards green energy. Iron ore also hit a record high.
The FTSE 100 closed up 53.54 at 7,129.71 – its highest trading level since the middle of February last year – and the domestically-focused FTSE 250 ended up 283.92 at 22,775.28. Further gains, however, were kept in check by a rising pound which typically moves in an opposite direction to equities.
Longer Lockdowns
New Delhi extended its lockdown for another week and adopted stricter restrictions to control a new wave of Covid-19 infections. India on Sunday found 403,736 new virus cases, reporting more than 4,000 Covid-19 deaths for a second day. Australian restrictions on gatherings are also being extended for another week in Sydney and surrounding areas after health officials said they were unable to identify how a man in the community caught Covid-19. In the U.S., new cases dropped to the lowest level since the end of September and deaths in the U.K. have slowed with more than a third of the adult population vaccinated. Meanwhile, the next global disaster is on its way and we aren’t ready, writes Niall Ferguson. And in Hong Kong, where shots are easy to come by, millions of people are refusing to get vaccinated, striking a blow to the city.
Steady Start
Stocks are set to start the week steady in Asia after U.S. equities climbed to a record Friday as a weak jobs report eased fears about higher inflation and a cutback in stimulus. Energy markets will be in focus after the shutdown of a major pipeline following a cyberattack. Futures were modestly higher in Japan, while they earlier dipped in Australia and rose in Hong Kong. All major groups in the S&P 500 rose Friday, and technology stocks were also higher. Meanwhile, now is no time to doubt U.S. equities, JPMorgan strategists say — as long as Fed Chair Jerome Powell and President Joe Biden are in charge of the recovery.
Bull Run
Investors are still piling in to the red-hot bull run in metals, staking billions of dollars that it won’t run out of steam any time soon. Copper’s already doubled in the past year to more than $10,000 a ton; Bank of America says $20,000 is possible and Goldman Sachs is also advising investors to load up in anticipation of a long-term rally fueled by the pandemic recovery and spending on renewable-energy and electric-vehicle infrastructure. Record amounts are flooding into some metal-focused exchange-traded products. Mining companies like Rio Tinto and BHP are surging as they generate supercharged profits, while investments in mining funds are also starting to swell.[Bloomberg]
US & Asia Overnight from Bloomberg
Most Asian stocks and U.S. equity futures climbed Monday after the S&P 500 Index hit a record on weak jobs data that added to the case for ongoing stimulus. Gasoline and crude oil rose after a cyberattack forced the closure of a key U.S. pipeline.
The materials sector led gains in an Asia-Pacific share index as commodities advanced. Australian stocks are on track to close at an all-time high, while Hong Kong underperformed. Gasoline jumped as much as 4.2% to a three-year high before paring the increase, with U.S. operator Colonial Pipeline providing no timeline for a restart following a shutdown late Friday due to a ransomware attack.
Iron ore futures in Singapore surged on strong demand from China. A “Goldilocks scenario” seems to be transpiring for commodities as the global recovery from the pandemic progresses, according to Goldman Sachs Group Inc.
The dollar trimmed losses after tumbling Friday, while the pound jumped to a 10-week high after results showed Prime Minister Boris Johnson’s party made strides in local elections. Treasury yields edged up toward 1.60% as traders brace for a busy week of auctions.
The energy price surge is adding to the inflation debate ahead of a U.S. CPI report this week that is forecast to show prices rising further in April. Investors will also parse comments from a series of Federal Reserve speakers for guidance on their thinking about the path of growth and policy following some softer-than-anticipated U.S. economic data.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
To start with it certainly looks like we are on course for a bull Monday, and a rise towards the 7200 level. We are just above the 20d Raff channel to start with as I am writing this, which is at 7160, and a rise towards the top of the 10 day channel top at 7217 may well play out. Metals, and in turn the miners remain strong, which helps the FTSE 100 being commodity biased.
We may well see an initial spike down, possibly to the 7130 level which was Friday’s closing price, and just above the daily pivot for today at 7124. We also have the green 30m coral at 7141 for initial support. Lower down the 2h chart remains bullish and the supports remain untested so far since it went bullish on Wednesday. Supports from that are at 7109 and 7057 for today, though both steadily rising, so roughly those levels and a bit above.
For the bulls, the slight concern is the daily RSI(10) is at 75, so a little overbought, but more upside is possible, especially if the S&P continues to go for the top of its Raff channels, which are at 4266 and 4277. Watch for this area in the next few sessions. A rise on that may well help the FTSE reach for the 7200 area, however we have 7182 as initial daily resistance, and then R2 at 7194. 7168 is R1 which we tested and dropped off from overnight, though if the bulls are quick out the blocks we may well see a break through that this morning.
Generally I am thinking that we have a bullish session today, and a possible small dip and then the rise. The ASX200 was bullish (again helped by commodities and miners) and we may well do the same. That said, cable has pushed on back above the 14000 level, which could in theory cap the rises a bit. Part of the reason why I am see a bit of a stutter around the 7200 area.
Below the 7123 daily pivot level then the 200ema on the 30m is at 7065 and loosely trying in with the 2 hour coral support. Should we get that low then a long here is worth a go.
So, remaining bullish for the moment but watching that 7182, 7200 and 7220 resistance levels, and 7135, 7109 and 7057 for support. Good luck today.
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