FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
British households may be spared punishing interest rate rises by the Bank of England thanks to Liz Truss’ plans to freeze energy bills. If it pans out then we may well have had peak-inflation in the UK as well, or be close to it. It could lead to inflation peaking at 11pc next month, rather than 14.5pc in January as currently forecast. It could also reduce the severity of the looming recession.
Markets are betting on another big interest rate rise when the Bank’s Monetary Policy Committee meets next week, following its 50 basis-point increase to 1.75pc in August.
Liz Truss is said to have settled on a system that will prevent the sharp rise in the energy price cap that’s due to kick in next month.
The prospect of aggressive Federal Reserve monetary tightening lifted a dollar gauge to another record Wednesday, hurting stocks and commodities and sparking efforts in Asia to stem currency weakness.
An Asian equity gauge slid to levels last seen in the pandemic fallout of 2020, European futures shed more than 1% and S&P 500 contracts retreated.
US PMI
The US services sector expanded in August at the fastest pace in four months thanks to a pick-up in business activity and new orders, while price pressures continued to ease. The Institute for Supply Management’s services index edged up to 56.9 from 56.7 the previous month.
Measures of business activity and new orders both advanced to their strongest reading of the year, reflecting both improved spending and steady wage growth. Demand strengthened abroad as well, with export orders expanding at the fastest pace in nearly a year.
Asian stocks fell on Wednesday as investors took no cheer from strong U.S. economic data and as weaker-than-expected Chinese trade numbers pressed the yuan lower.
China’s exports growth slowed in August, as surging inflation crimped overseas demand and fresh COVID curbs and heatwaves disrupted production, reviving downside risks for the economy. Exports were up 7.1% in August on a year earlier, slowing from an 18.0% gain seen in July, according to official customs data.
While that reinforced views the economy was not in recession, it also added to expectations the U.S. central bank would not slow the pace of interest rate hikes any time soon. Weaker-than-expected U.S. jobs data last week ignited hopes the Fed might consider a soft landing with slower rate hikes.
E-mini futures for the S&P 500 fell 0.51%, while the pan-region Euro Stoxx 50 futures were down 1.29%.
Other Asian currencies tumbled against the dollar due to the surge in U.S. bond yields.
In energy markets, crude oil prices stumbled on weaker consumption forecast. U.S. crude fell 1.7% to $85.4 per barrel and Brent was at $91.7, down 1.3% on the day.
Hedge Funds
After spending much of 2022 playing defense, hedge funds are reasserting themselves with aggressive equity bets on both the short and long side.
They have raised exposure in back-to-back weeks, data from Goldman Sachs prime brokerage show, increasing short sales via macro products such as index futures while buying shares of individual firms. The data suggest money mangers are both keen to pick up bargains and leery about the broader market’s direction. The equity activity also marks a reversal from what hedge funds were doing most of the year: unwinding risky bets amid heightened market volatility.
FTSE100 live outlook prediction analysis for 7th September 2022
The 7320 level proved to be a tough nut to crack on the FTSE100 yesterday, along with the 3960 level on the S&P500. The shorts from these levels did well, and today we may well see the weakness continue, after an initial kick up. The ASX200 and Asia in general was also weak, and with the current backdrop, including Russia rumoured to be buying arms from North Korea (Chinese proxy?) the ill winds continue to blow.
September so far living up to its usual bearish self anyway, and shorting the rallies still the best play.
If we do get an early rise then I am looking at the 7265 to 7280 area as key resistance to start with as we have a cluster of levels of significance here. If the bears appear here then they could take it down as low at 7210 where we have the green 2h coral, and also S2 for today. S1 has held overnight (just about) and we are also on 2h support from the Hull MA at 7230 to start with as I write.
The rise may falter at the 30m 200ema, coral and daily pivot though as the bears will certainly be keen to keep the bearish momentum from yesterday going for a bit longer. Above the 7280 level then the bulls would probably feel more confident, and 7325 key fib test would be the next likely target. They do still have a bullish 2h chart in play, though the daily is still bearish, with the 7361 25ema level still hovering as a swing short entry – keep an eye on this.
Below the 7210 level then its gets pretty bearish with 7130 and then 7030 the next key levels. I don’t think we will get that low today to 7130, and the markets may well start to have a bit of stabilising as Liz Truss rolls out the new cabinet, policy plans etc. Consumers will certainly be breathing a sigh of relief that G&E bills pause their rise!
S&P500
Having dropped to the 3900 level the 2h has gone bearish with 3908 now 2h resistance. The bulls will need to break above that, and ideally 3920 where we have the daily pivot, to have a hope of pushing it higher, while the bears will be looking to take it down towards the 3876 S1 level. Below that and S2 at 3843 is next up. If the bulls were to push above the 3920 level then 3950 is next up with R1 here, and also the 200ema on the 30m.
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 FTSE100, 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 FTSE100, DAX40, Gold and S&P500.
- 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 with just your email address