8th August 2019
Wall Street opened sharply in the red yesterday, with the Dow Jones down 2pc shortly after trading began as a series of central bank rate cuts and a bond surge sparked fears that the global economy is heading towards recession.
Shares are up slightly across Europe following Monday’s rout and a drop in sentiment Tuesday afternoon.
European indices were up around 1.3pc just after midday, with the FTSE 100 lagging behind with a 0.9pc climb, following four days of tumultuous trading.
The global equities market has been shaken out since last Thursday, after US President Donald Trump spectacularly reignited trade tensions with rival China by announcing plans to place fresh tariffs of Chinese goods from September. Investors fled to assets such as bonds, gold and ‘safe haven’ currencies, making it stock markets’ worst week of 2019.
China responded on Monday by devaluing its currency, a dramatic flexing of its economic muscles that led to worries the world’s two largest economies were heading into a currency war. A weaker renminbi makes Chinese exports cheaper for foreign buyers, which Mr Trump has alleged allows China to undercut US manufacturers.
Tensions eased on Tuesday when China set its target rate for the renminbi stronger than the symbolic floor of 7Rmb to $1 — even as the US formally accused the country of currency manipulation. Europe was unable to hold gains as sentiment soured in the afternoon, but the US ended in positive territory as Wall Street caught its breath.
Asian stocks had a muted open as investors assessed the implications of the latest central bank moves to bolster growth. U.S. equities and benchmark Treasury yields mounted a turnaround late in the day, reversing sharp declines. Japanese futures rose, while they dipped in Australia and were little changed in Hong Kong. Earlier, the S&P 500 Index recovered from a decline of as much as 2% to eke out a modest gain. Oil extended a decline after Brent crude closed in a bear market on Tuesday. It clawed back losses in after-hours trading in New York after Saudi Arabia contacted fellow crude producers to discuss ways to halt the slide in prices.
Donald Trump stepped up his assault on the Fed, renewing his demands for “bigger and faster” rate cuts. “Incompetence is a terrible thing to watch,” he wrote in a series of tweets that shrugged off concerns about China. “Our problem is a Federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much.” At least one policy maker sounds sympathetic to the president. Chicago Fed President Charles Evans said developments since last week’s rate cut may indicate economic headwinds that warrant more easing.
FTSE 100 Trading Signals, Forecast and Prediction
Could well see a dip and rise play out again today. The S&P has regained ground after that dip down to 2825 yesterday and the bulls will be trying to break and hold above the 3000 level in order to keep the rising weekly trend in tact. Initially they will be keen to hold love 2900. That may well see the FTSE rise towards the 7280 resistance level, and a possible rise higher towards the 200ema on the 30min at 7315. We also now have the daily resistance level to watch at 7424 currently. A rise to here then a drop back would all actually fit and play out pretty well over the next few sessions.
Support is at the 7200 area initially this morning, and overnight we have had a decent rise. The large dividend helped underpin the bulls yesterday but if the sentiment can remain a bit more optimistic we may well see the bulls build on that. Below 7200 then 7152 and 7093 are the main levels to watch.
Generally though, unexpected news notwithstanding, I am thinking that we will be seeing a rise over the next couple of sessions to target the 7420 level.
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!
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