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The FTSE 100 logged its fourth consecutive week of gains, as global sentiment got a boost from signs of waning US inflation even as domestic data showed Britain’s economy contracted in the second quarter.
The blue-chip index ended 0.5pc higher at a two-month high. The index has outperformed its global peers this year, aided by weakness in sterling and its large exposure to energy and defensive companies.
Asian stocks were off sessions highs Monday and the dollar rose as investors reacted to surprise interest-rate cuts in China and data highlighting its economic travails, which are dimming the global outlook.
China and Hong Kong shares struggled, leaving an Asian equity index with a gain of less than 0.5%. Japan was the key prop with the Nikkei 225 set to erase its 2022 losses. S&P 500 and Nasdaq 100 futures dipped but Europe’s advanced.
Investors remain anxious to see if Wall Street can sustain its rally as hopes U.S. inflation has peaked will be tested by likely hawkish commentary from the Federal Reserve this week.
Markets are still implying around a 50% chance the Fed will hike by 75 basis points in September and that rates will rise to around 3.50-3.75% by the end of the year.
Hopes for a soft economic landing will also get a health check from U.S. retail sales data that is expected to show a sharp slowdown in spending in July.
Investors wanting to gauge the health of global consumer sentiment should look no further than China’s factories right now. Makers of everything from Christmas decorations to clothing say orders from overseas customers are drying up. Snapshots from China’s factories indicate households worldwide are tightening their belts to contend with a rapid rise in the cost of living, adding weight to warnings about a potential global recession. Meanwhile, for the first time in four decades, investors in the US and other rich economies are looking for a portfolio strategy that can win against elevated inflation and recession both at the same time.
FTSE100 live outlook prediction analysis for 15th August 2022
Bull Monday possibly on the cards with a dip and rise to play out. I would like to see the 7500-7520 area hold as support as we pushed through that 7520 resistance level on Friday, and it is now also the daily pivot and a green 30m coral support area. If that does hold then we may well see the bulls try and push it up towards the 7599 R2 level today. The bad news backdrop is certainly being shaken off successfully at the moment, and the S&P500 looks to be on track to test 4300 before too long!
Below the 7520 support area though and the bears will be aiming for the 7466 key fib. However, the 2h chart is bullish and also has support at the 7500 area from both the Hull MA and coral. As such we may well see a decent defence from the bulls in this area.
Below 7466 then 7430 is S2 and just below the daily support at 7445.
Back to the bulls, and if they were to break above 7600 today then 7645 is the next daily resistance level. That seems a bit of a tall order for today, especially as the 4300 S&P level isn’t that far away and will in theory be strong resistance. If that drops off a bit from there it may well temper the FTSE100 too.
We have UK inflation on Wednesday with the forecast an increase to 9.8% from 9.4% previously. However with oil dropping back (and pump prices) we may well see that come in slightly lower. US retail sales and FOMC minutes also due on Wednesday.
So, looking at a dip and rise today with a decent hold hopefully of the 7500 area for a push up towards 7600. The Raff channels are heading up still and we may well continue to drift higher during the remainder of August.
Good luck today.
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