22nd October 2018
Last week the bulls managed to keep the FTSE 100 above the 7000 level in a positive sign for a rise towards the 7220 25ema on the daily as the index defied concerns about a slowdown in the Chinese economy and ongoing Brexit uncertainty to end the week on a high. The FTSE 100 closed up 0.77pc for the week and up 0.32pc for the day on Friday, at 7,049.8.
Investors took disappointing GDP data from China in their stride, despite third-quarter growth in the world’s second-largest economy falling short of analyst expectations. China grew by 6.5pc, its worst performance since the first quarter of 2009 in the throes of the financial crisis. Analysts had pencilled in growth of 6.6pc for the quarter.
Meanwhile, on the world stage focus remains on Saudi Arabia’s evolving account of the death of journalist Jamal Khashoggi – which the kingdom’s foreign minister on Sunday cast as a “tremendous mistake” perpetrated by a “rogue operation” – has elicited skepticism from officials in the U.S. and its allies as they weigh how to respond. France demanded more information, while Germany put arms sales to the oil-rich nation on hold. Republican and Democratic lawmakers said they suspected knowledge of the killing reached the highest levels of the Saudi regime. Meanwhile, Treasury Secretary Steven Mnuchin emphasized the importance of the U.S.’s economic ties with Saudi Arabia, reinforcing the Trump administration’s priorities. Mnuchin canceled his participation in a Saudi investment conference this week.
The coming week brings a pivotal European Central Bank meeting Thursday as policy makers begin to scale back asset purchases. Saudi Arabia’s “Davos in the Desert” kicks off amid an exodus of many movers and shakers following the death of the dissident journalist. It’s a mega week for tech earnings, with Amazon, Alphabet, Microsoft and Intel all due to report. Tuesday, Bank Indonesia’s rate decision will garner plenty of interest. While policy makers are expected to hold rates, the rupiah’s tumble this year will have FX traders poring over every utterance from Governor Warjiyo. Among key data highlights this week, Singapore and Hong Kong CPI are due Tuesday and Japan’s flash manufacturing PMI Wednesday. Thursday’s list includes New Zealand trade data and South Korean third-quarter GDP. The U.S. releases the Fed Beige Book, Markit manufacturing PMI and new home sales Wednesday and third-quarter GDP Friday.
The start of the week will test China’s rally Friday after officials waded in to assure investors. The S&P 500 ended the week virtually unchanged after days of wild trading, while tech shares remained under pressure. Bonds sold off, with 10-year Treasury yields hovering near 3.20 percent. The dollar lost ground against most of its Group of 10 peers, but the yen fell. Oil rose, while gold was flat.
FTSE 100 Trading Signals, Forecast and Prediction
I am thinking that today we will see a cautiously bullish day (famous last words as it climbs 100 points!). There is decent support to start with today at the 7038 level where we have the daily pivot, and the bulls will be keen to pull away from the 7000 area to try and get a rise towards the daily resistance at the 7225 area underway. If we follow Asia’s lead, which saw stocks and US futures dip and rise, as well as a dip on Treasuries, then we may well be on for a bullish Monday again. The line in the sand though is still around the 7075 area which is the level that the bulls need to break. Above this the 7156/7170 area is the next resistance of note, with the 7225 above that.
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