21st August 2019
It was a day of two halves for both currency and equity traders in the UK after the FTSE 100 reversed early gains to end 0.9pc lower at 7,125 points. The mid-cap FTSE 250 also slipped, ending 0.5pc lower at 19,008 points. Sainsbury’s was the biggest winner of the FTSE 100 after outperforming its “big four” supermarket rivals, albeit by suffering a smaller decline of sales than the others. Its shares added 5.5p, or 3pc, to 193.9p.
Equities across Europe were lower amid political uncertainty, not least in Italy where prime minister Giuseppe Conte said he would resign. The main indices in the US are also trading lower.
The pound went in the opposite direction after comments from Angela Merkel that Europe would think about practical solutions to the current Brexit impasse were interpreted as a chink of light in the stand-off between Downing Street and Brussels. Market reaction to the comments erased sterling’s early losses against the dollar and the euro. The pound rose as high as $1.218 and €1.098 before surrendering some of its gains.
Let’s Not Make a Deal
U.S.-China trade talks are likely to continue despite friction over Huawei. U.S. Secretary of State Mike Pompeo said other firms present national-security risks but didn’t name them during an interview with CBS. He also called on Beijing to respect Hong Kong demonstrators’ rights and the city’s autonomy in order to fulfill its promises—which is important for a trade deal. President Trump showed no urgency to resolve trade friction with China, saying “I’m not ready to make a deal with China.” He also called for Russia to be readmitted to the G-7, threatened to tax European automobiles and agreed to drastically scale back plans to slash billions of dollars in foreign assistance.
FTSE 100 Trading Signals, Forecast and Prediction
Asian equity markets traded subdued as the region conformed to the dampened global risk tone with markets cautious ahead of looming FOMC risk. Meanwhile EU sources reportedly believe UK PM Johnson is pulling British officials out of EU meetings which hints that the PM is not serious about achieving a Brexit deal. Cable rose on that, which dragged the FTSE 100 down yesterday.
With the Fed minutes at 7pm this evening, we may well see bit of a slow rise as we head towards that in case they give some guidance on further rates cut – what and when. Maybe! Buy the rumour sell the news possibly to play out.
The bulls have defended the overnight lows, and the 7110 area mentioned yesterday has held, despite moving slightly below overnight. The daily chart resistance levels have dropped down, and the 25ema on the daily is now at 7288 so a rise to this area still looks like a decent shorting spot. The bulls are trying to also defend the 2900 level on the S&P, and have managed to bring it back above that after a drop down to 2892 overnight.
So watching for a rise towards the 7188 level or higher ahead of the Fed. 7245 is still resistance above and a break of 7188 would more than likely see a rise towards there, possibly R2 at 7283 higher up. Might be a big ask to see that higher level today, but depending on the US and Fed we may well see some optimism come back in. 7086 for support below 7110, with a possible retest of the lows at 7020 should that break. I am still favouring a rally towards the daily resistance levels though before another leg down and if the bulls can defend those overnight lows that would appear to be more likely.
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