9th May 2019
Global stocks fluctuated ahead of crunch trade talks between the US and China as Beijing warned that it will retaliate if the Trump administration lifts tariffs on Friday.
Donald Trump confirmed that negotiations between the two sides will still go ahead despite his threat to raise tariffs on $200bn of Chinese goods to 25pc from 10pc. A trade deal between the world’s two largest economies was put in jeopardy after the US claimed that China has backtracked on key pledges made during months of talks. The US president briefly lifted the mood on markets this afternoon after insisting that Liu He, China’s vice premier, will arrive in Washington to “make a deal”.
US stocks erased gains following the end of play in Europe after Beijing’s commerce ministry warned that it would be forced to counter higher US tariffs with its own measures.
The pound was been dragged back below $1.30 against the dollar in the afternoon as hopes of a cross-party Brexit deal fade. Speculation over the fate of the talks and Theresa May’s position in Number 10 have sent sterling sliding versus all of its major rivals.
China’s exports fell again last month in a fresh sign the global economy is still at risk from a serious slowdown. Sales abroad fell 2.7pc compared with March 2018, reversing some of the surge in February’s exports and underlining the hazards of the trade war with the United States. Imports rose by 4pc, accelerating from a drop in the previous month, led by rising commodities prices and oil purchases.
The U.S. and China sent dissonant signals on trade, as President Trump struck a hopeful note and Beijing threatened retaliation if Washington hikes tariffs Friday. Just don’t bet on a deal getting done before then, warned Goldman Sachs, putting the chances of higher tariffs at at 60%. JPMorgan’s Jamie Dimon sees a deal coming, just not by Friday.
Turning Up The Heat
Trump banned trade in Iranian iron, steel, aluminum and copper, ratcheting up tensions hours after Tehran threatened to start enriching uranium again unless Europe throws it an economic lifeline. As for the oil business sanctions have cost it? Saudi Arabia plans to meet all orders for oil purchases it’s gotten for June—including from countries that had to stop buying Iranian crude, a person familiar said.
FTSE 100 Trading Signals, Forecast and Prediction
I am looking at two main areas on the FTSE for today and that is support at the 7200/7213 area, and resistance at the 7308/7314 area. The ASX200 has pushed on well during Thursday and we may wee see some FTSE strength today though of course a lot is dependant on the news out of the USA regarding the trade talks. The latest was that China “broke the deal” which is what rattled the futures markets.
For the moment, the 200ema on the daily chart is holding as support with daily closes above it for the last three daily candles. Support from that today is at the 7229 level but we may well repeat and move below it before closing above it. Would fit with a drop down towards 7200 and then a bounce.
The 30min chart is bearish to start with today, with resistance at the 7251 area where we have the daily pivot and the 25ema. The coral is currently green, but if we stay below 7250 then I expect that to go red soon which suggests a downtrend on that time frame. The FTSE held up pretty well yesterday after printing the 7221 low, rising slowly and steadily towards the 7280 level before dropping off a bit. So there are still some buyers around. The fear gauge has dropped to 42/100 (fear) so if the trade discussions yield a positive today/Friday then we may well see the buyers jump in. Buy when others are fearful and all that….
Below the 7200 level then we have the bottom of the 10 day Raff channel at 7160 and a break of that starts to look very bearish with 7000 and 6850 on the cards. We are certainly seeing the “sell in May” play out at the moment, however, as we know it does have a habit of resuming the bullish trend on each significant dip at the moment, usually helped by the US! I expect the trade deal will yield a catalyst to push it back up tomorrow.
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