FTSE 100 live outlook prediction analysis for 30th January 2020
- Federal Reserve keeps interest rates at 1.50pc – 1.75pc
- Apple shares hit an all-time high after iPhone sales rise. Tech giant is now worth $1.4 trillion
- European shares rise marginally, FTSE 100 lags pack
- Hong Kong’s Hang Seng index falls nearly 3pc on first trading day since new year break following virus outbreak
In summary, the Fed’s policymakers refused to bow to renewed pressure from the President to slash interest rates to boost the economy as the 2020 election comes into focus. The Federal Open Market Committee voted unanimously to leave rates unchanged at a range of 1.5-1.75pc after opting for stimulus three times last year to stave off the threat of recession. Jerome Powell, the US central bank’s chair, also admitted its rate-setters are “very carefully monitoring” the coronavirus as fears mount of its impact on global supply chains and growth.
- Fed sees inflation moving closer to target over next few months
- Fed is determined to avoid inflation persistently running below 2pc
- Expected to continue offering repo support through April
Stocks across Europe pushed marginally higher, with the FTSE 100 climbing just 0.04pc to close 7,483.57 and the FTSE 250 rising 0.17pc to 21,468.99. They rose to resistance levels after the dead cat bounce Tuesday, with markets getting ahead of themselves during that session, and we saw a nice drop off on the FTSE from 7515, the S&P from the 3294 level and the Dax at 13375. We should now see a leg lower across the board, and a climb on gold towards 1600.
Staying Steady
The Federal Reserve kept its key interest rate unchanged and continued to signal policy would stay on hold for the time being as the U.S. enters a presidential election year, but Fed Chairman Jerome Powell isn’t satisfied with inflation running persistently below 2%. The central bank also made a technical adjustment to the rate it pays on reserve balances and said it would extend a program aimed at smoothing volatility in money markets — at least through April. “We believe monetary policy is well positioned to serve the American people,” Chairman Jerome Powell told a press conference Wednesday in Washington following the decision. Policy makers also changed their language to say that the current stance of monetary policy is appropriate to support “inflation returning to the committee’s symmetric 2% objective.” Previously they had said policy was supporting inflation “near” the goal. U.S. stocks climbed and then pared those gains, while yields on the 10-year Treasury declined, as did the dollar.
Markets Sputter
Treasuries rose after the Federal Reserve continued to signal policy would stay on hold and cited inflation concerns. Meanwhile, Asian stock futures pointed to a cautious start and U.S. equities closed flat as ten-year Treasury yields retreated toward the lowest levels since October and traders lifted bets on a U.S. interest rate cut by November. American stocks struggled to hold on to gains, and Asia was on course for modest declines amid lingering concern about the coronavirus. Earnings continue to roll in, with Facebook Inc. falling in after-hours trading following its underwhelming result. Microsoft Corp. rose as sales and profit topped estimates. Elsewhere, oil fell after a government report showed the biggest jump in U.S. crude stockpiles since November. The European Parliament approved Prime Minister Boris Johnson’s Brexit deal, clearing the way for the U.K. to leave the EU on Jan. 31 with an agreement that, for the time being, will avoid a chaotic rupture.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
As per yesterday I am still thinking that shorting the rallies is the play for the moment, and with the S&P failing to break above the 3294 resistance level we had for yesterday, we may well see a leg lower across the board, and an associated uplift in gold towards the 1600 level. The FTSE is starting today as I write this sat on the 2 hour support level at 7438, and we also have the fib level and S2 just below this at 7430. As such we may see the bulls use this as a springboard and we get a bit of a gap close towards the 7485 level. We then have a few resistance levels of note in play at this area and as such we may well see a drop off from here.
A rise and dip pattern would play out quite well, as would the bigger drop on the S&P down towards 3200 now, before a more substantial climb from that lower support level, possibly 3190. Prior to that we do have the bottom of the 20d Raff channel at 3232 for now. The FTSE looks likely to defend the 7350 area as well, as we have the bottom of the 20 day Raff channel here and also the 200ema at 7367.
Should the bulls push past the 7485 resistance level then the 25ema on the daily at 7533 is the next key level up and a level that will be worth a short. The bulls couldn’t quite manage to get this high yesterday so they are swimming against the tide for now as we turned at 7515 instead. Can they push that little bit higher?
If the bears break below the 7430 level then 7398 is S3 and likely to be tested. Round number support here as well, though as mentioned above, the 7355 area is better long term support. That said, if the S&P drops 50/60 the FTSE needs to be quite resilient to only drop 100 or so so will be interesting to see it play out, even if it does fit!
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