29th July 2019
Friday saw major indices across Europe look healthy throughout, with all except Italy’s staying narrowly positive the day after the European Central Bank said that it would hold interest rates steady. The FTSE 100 closed the week out at 7549, up 0.85% for the day.
Trade Talks
Almost three months after their trade talks broke down in acrimony, Chinese and American negotiators meet again in Shanghai this week amid tempered expectations for breakthroughs in their yearlong trade war. Two days of talks are scheduled to restart Tuesday after an uneasy truce reached by Presidents Donald Trump and Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, last month. Deep tensions remain, though, and recent days have brought mixed signals from both sides, with neither showing an urge to compromise.
Brexit Plans
Boris Johnson is getting serious about a no-deal Brexit. The U.K. PM formed a war cabinet of six senior ministers to plan for an exit by Oct. 31, with senior aide Dominic Cummings saying the divorce will happen by “any means necessary,” according to the Sunday Times. Johnson is prepared to suspend Parliament or hold an election to thwart those that may get in his way. “No deal is now a very real prospect,” Michael Gove wrote in the newspaper.
Markets Wrap
Asian stocks dropped to start the week as U.S.-China trade talks resume and the Federal Reserve is expected to deliver its first interest-rate cut in a decade. Declines were especially notable in Hong Kong and South Korea. The S&P 500 and Nasdaq Composite indexes hit fresh records Friday as technology shares rallied. Futures on the S&P 500 dipped after the index closed at a fresh record high Friday. Treasuries were little changed and the dollar advanced against its major peers after White House adviser Larry Kudlow said the U.S. has ruled out plans to intervene in foreign-exchange markets.
FTSE 100 Trading Signals, Forecast and Prediction
The FTSE managed to hold onto the 7550 level at the close on Friday and despite the weaker Asian session Monday it has held onto that area. On the Brexit front, the no-deal option is still a very real possibility, with Boris’s fighting talk and assembly of a “war cabinet” to ensure that come hell or high water, we are leaving by 31st October.
The ASX200 had a fairly positive session and I think that the markets will be buoyed up by the expectation of the Fed cutting rates this week, when the news comes out on Wednesday. Will we possibly see a slow and steady rise heading towards that with the “buy the rumour, sell the news” panning out? Expectations are we see a 0.25bps reduction announced, though equally no cut would also make sense as the economy is, according to the data, doing well. Maybe holding them steady will cause the markets to spit the dummy out. The S&P made new record highs on Friday and it only goes on so long breaking records before the worm turns.
Initially today we have fairly positive looking charts for the FTSE 100. The 2 hour has support from the Hull moving average at 7518, and it looks like the coral is about to turn green on that time frame as well. Cable has continued its decline and is now back below the 12400 level and making new lows. That will however help underpin the FTSE 100 strength. No deal fears weighing on that. Looking at the FTSE 30m chart, we have support at 7542 to start with where we have the green coral, but below this there is a cluster of supports at 7524 for the 200ema, 7531 for the daily pivot and then also those 2 hour supports.
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