28th May 2019
European markets breathed a sigh of relief after the EU’s election results showed that pro-European parties have held their own against a rise in euroscepticism. European indices climbed across the board on Monday morning as support for far-right and nationalist parties fell short of market fears, leaving a majority of EU representatives in favour of the economic bloc.
The FTSE 100 wass closed yesterday for the UK bank holiday, but bourse across Europe inched higher while the euro held steady against major currencies. In early trade, Europe’s Stoxx 600 rose by 0.5pc before easing to 0.26pc by midday.
Ahead of the elections investors had feared that a surge in support for eurosceptic parties to more than 30pc of the vote could seriously disrupt European governance and the bloc’s hopes of a united front against a looming global trade war.
Germany’s Dax 30 index was up 0.6pc before slipping to 0.4pc above its previous close, while Spain’s Ibex 35 rose 1.1pc before easing to 0.56pc from Friday. Although far-right parties gained ground in France and Italy their markets indices were buoyed by the proposed €33bn (£29bn) mega-merger between carmaking giants Fiat Chrysler and Renault.
The French Cac 40 climbed 0.5 per cent and in Italy the FTSE Mib climbed by 1.75pc.
Meanwhile, Asian markets made a tepid recovery following a difficult week dominated by fears of a trade war between the US and China.
US President Donald Trump said ahead of trade talks with Japan this week that there was a “very good” chance of clinching “a great trade deal” with China “sometime in the future”.
The Tokyo exchange rose 0.3 percent, while Shanghai closed 1.4 percent higher.
FTSE 100 Trading Signals, Forecast and Prediction
The FTSE 100 is back above the 7300 resistance level (just!) as I write this, and with the daily pivot at 7296, and the the 200ema on the 30min at 7292, we may well see a bit of an initial rise this morning. I am looking at two main resistance levels for today, the first being 7345 where we have the R2 level, and also the fib level. Then above that a more significant daily resistance at 7375. Should we see this level then I am liking the look of a short here, for a pull back to the support. It does all look fairly positive still, and a rise to 7400 and the longer term 7529 mentioned a while back still looks to be on the cards. Considering the weakness last week the FTSE held up pretty well really, only dropping down to 7210.
That said, the daily moving averages I watch are still bearish, so the bulls will need to break and hold above the 7320 level for a few sessions to get that bullish again. The 2 hour chart is however bullish, and shows support at 7266 for today. Should the bears break below 7292 then I expect we will see this area.
Asia was mostly positive Tuesday, the ASX200 also putting in a strong start, and we may well follow suit again. The first morning after a long weekend can be a bit choppy while everything settles in, but I am thinking that we too will get an initial rise.
Should the bears break below the 7266 level then a trip down towards 7210 looks likely which is the recent low, with 7160 below that and then possibly a test of the bottom of the 20 day Raff which sits at 7085 currently (but is slowly moving lower).
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