29th April 2019
Data on Friday showed that US growth smashed expectations to accelerate in the first quarter as the American economy defies the slowdown taking hold in Europe and China. Gross domestic product rose at a 3.2pc annualised rate as the US economy rebounded after slowing for two consecutive quarters.
However, economists warned that the stellar headline figures mask underlying weaknesses and were lifted by temporary factors. Fleeting boosts from inventory building, local government spending and trade could unwind during the rest of the year, they warned. Consumer spending growth, a key driver of the US economy, also slowed to 1.2pc, suggesting that underlying demand has weakened.
Markets in New York opened flat following the figures while the FTSE 100 was weighed down by heavy fallers and the oil price surge cooling. Brent crude slumped more than 4pc after Donald Trump claimed he “called up Opec” to tell the oil cartel to bring prices down. The FTSE 100 bulls defended the 7400 area though, failing to get it down to the 7385 support area.
Brexit
UK Labour is said to be prepared to sign up to a Brexit deal with the government without the promise of a referendum attached if cross-party talks make significant progress in the coming days
Big Data Week
The world economy’s ability to rebound from its recent soft patch will be tested anew this week as data is released from Washington to Beijing. Federal Reserve officials conclude their latest policy meeting on Wednesday amid expectations they won’t change their monetary settings as counterparts elsewhere follow their dovish turn. Chairman Jerome Powell’s press conference will be eyed for insights into his view of the outlook and thinking on the Fed’s inflation target and bond portfolio. The high point for U.S. data will be Friday’s release of the U.S. jobs report for April, with a gain of about 185,000 expected by the consensus of economists surveyed by Bloomberg News. Elsewhere, China releases its purchasing managers index on Tuesday, the same day that the euro-area is predicted to show its economy steadied in the first quarter. Economists expect further steadying in China’s factory gauge in April.
Markets Open
Asian stocks had a mixed start to a week and volumes are likely to be down with Japanese markets shut for holidays. Futures signaled gains at the start of trading for equities in Hong Kong, while Australia was poised to open flat. U.S. stocks climbed Friday and the S&P 500 Index reached an all-time high amid a flurry of earnings reports. The euro was steady after S&P Global Ratings left Italy’s rating unchanged Friday. Results from the Spanish election had no noticeable impact. Ten-year Treasury yields dropped below 2.50 percent Friday after the strong U.S. GPD report had also showed tepid inflation.
FTSE 100 Trading Signals, Forecast and Prediction
The FTSE 100 defended the 7400 level on Friday and has risen to test the 2 hour resistance as I am writing this, at 7441. Above this we have the red 2 hour coral at 7466, but also the daily resistance at 7452, where we also have the 200ema on the 30min chart. As such, and following a weaker session from the ASX200 today, I am thinking that we may see a put of a pullback from this 7452 level, at least down to the daily pivot at 7425. We also have a cam break out at the 7453 level so it certainly looks pretty key to start with today. Should the bulls break above this level then a test of the 7475 level looks likely, and with R2 and a key fib here this level is also worth a short.
As you can see from the support/resistance list above the levels are getting quite bunched as we have a bit of compression. The daily trends are still up, but the failure of the bulls to break and hold above the 7525 level last week led the bears to appear. For them to now gain control they would need to break it below the 7385 level, with 7350 support below that. However, with their failure to break below 7400 on Friday then the bulls are certainly still in the fight. Certainly having a bit of a battle at the moment, which is why I am focusing on the main areas of support resistance and trading off them, rather than trying to go for any large swing type trades.
A lot will depend on the US later today and if we push back up or drop down to test Friday lows. Initially today I can see the bulls defending the 7425 level where we have the 30min coral support, and daily pivot. The bulls will of course be keen to break above the 7452 level as well. So a fairly tight range really to start with today.
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