FTSE 100 live outlook prediction analysis for 20th April 2021
Sterling rose to its highest level since March 18 against the US dollar as traders await a data-heavy week that is expected to show the UK’s economy is rebounding from the pandemic. The British currency also rose as much as 0.7pc against the euro to touch 85.89 pence – the highest in almost two weeks – amid confidence in the UK’s roadmap out of lockdown.
The pound rose 1pc to $1.39 against the US dollar, ahead of this week’s PMI surveys, as well as figures on the labour market, inflation and retail sales. It was also reaping the benefits of currency traders in the US selling off the US dollar over inflation fears.
A stronger pound knocked the benchmark FTSE 100 from its post-pandemic high reached on Friday, though it still managed to just about remain above the 7,000 level. It closed down 19.45 points at 7000.08. The mid-cap FTSE 250 shed a similarly slight 31.32 points to 22,490.86.
Weaker oil prices also acted as a heavyweight, after a surge in infections in India and other countries sparked concern about demand.
Faster-spreading Covid-19 variants are sending more children and young adults to the hospital. Fatalities remain low, but doctors say the virus is now making the young sicker, some gravely, and cautionary tales are beginning to multiply. Elsewhere, with coronavirus cases in India surging the U.K. government has added the country to its travel ban list; the World Health Organization is working “very intensely” with Russian and Chinese authorities to get their vaccines pre-qualified; and New York City’s positive test rate dipped below 5% for the first time in several months.
Tech Weakness
Asia stocks are set to open lower on Tuesday after weakness in the technology sector pulled U.S. indexes from all-time highs, with investors following the drumbeat of corporate earnings. The dollar fell. Futures pointed lower in Japan, Australia and Hong Kong. The tech-heavy Nasdaq 100 Index underperformed in the U.S. session, while the S&P 500 Index posted its biggest drop in almost four weeks. Tesla contributed the most to the decline as one of its electric cars that no one appeared to be driving crashed and killed two passengers. It rose after the end of regular trading when Elon Musk said Autopilot wasn’t a factor in the accident. Treasury yields edged back up to around 1.6%. Meanwhile, Wall Street bears battered by the Reddit crowd earlier this year have yet to regain their gumption, even with stocks at records and valuations near two-decade highs.[Bloomberg]
US & Asia Overnight from Bloomberg
Asia stocks fell Tuesday after weakness in the technology sector pulled U.S. indexes from all-time peaks, with investors weighing corporate earnings and recent spikes in virus cases. The yen hit its strongest levels since early March.
Shares rose in China though dropped in Hong Kong and Japan. U.S. contracts advanced, after the tech-heavy Nasdaq 100 Index underperformed in the U.S. session, while the S&P 500 Index also fell. Tesla Inc. slumped after concerns about a fatal crash of one of its electric vehicles, which appeared to have no driver.
Treasury yields traded around 1.6%, well off recent highs, and the dollar dipped.
Chinese delivery giant Meituan raised $9.98 billion from a record top-up placement and a convertible bonds sale. Meituan’s shares were volatile on Tuesday, though higher as of midday.
Investors are awaiting further confirmation of the private sector’s recovery from the pandemic as the earnings season gathers pace. The bright spot in the latest reports was the first revenue gain for International Business Machines Corp. in eleven quarters. Even with this latest pullback in major indexes, and the latest grim news on the spread of Covid-19, global stocks are trading near record highs.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The bears appeared at the 7040 resistance level yesterday and we actually managed a move below the 7000 level, but despite the early hold of the 6995 level the bears managed 6980 on the second push down. The bulls have fought back though, helped by the S&P defending the 4150 level, and we are still hovering around the 7000 level.
With the weakness yesterday the 2 hour FTSE 100 chart has gone bearish and has resistance once again at 7030 on that. That ties in with R1 and the first fib level, with the more significant fib level slightly higher at 7051. Can the bulls push it that high today? The ASX200 had a bit more of a bearish session and if the S&P decides to drop off a bit and break 4150 it will pull the FTSE 100 down with it. Possibly down towards 6950 where we have S2 for today and also the bottom of the Raff channels.
If the bulls were to push past the 7050 level then 7097 is R3 for today, and we then we are also near the top of both the Raff channels. It seems a big ask to push that high today, especially with sterling climbing as it is, which should in theory keep a lid on too much FTSE 100 exuberance! Talking of which, cable is currently just above its daily resistance level so if the data that it is driving it disappoints at then we may well see that drop back.
For the bears, they will be looking for an initial dip down to the 200ema on the 30m at the 6980 level and yesterdays low, and S1 at 6975. Below that we have the key fib at 6957 and then S2 at 6946. As mentioned above, this 6950 level would need to be defended strongly otherwise we are likely to see a slide down to the bottom of the Raff channels and the 6900 area.
After yesterday the 2h charts are bearish for all three of the markets I look at – FTSE 100, Dax and S&P with resistance at 7030, 15418 and 4180 respectively to start with today. Worth keeping an eye on these levels and worth some tentative shorts.
Good luck today, feels like the bears are circling but not committing…..
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