12th September 2019
The FTSE 100 closed up again yesterday, though just off the daily high, as we head towards the ECB today and expected stimulus measures. The pound also fell which helped to underpin the rise. Meanwhile, Hong Kong stock exchange operator HKEX unveiled a surprise £30bn bid for the London Stock Exchange Group, which ended closing up 6%.
One of the world’s biggest oil traders has warned that prices could slip to $50 a barrel over the next six months as the global economy slows and supply rises. That would represent a 20pc fall in the price of oil and prompt Opec, a group of 14 oil-producing countries led by Saudia Arabia, to cut production in a bid to bolster prices. Opec cut its forecast for growth in global oil demand this year and next and lowered its expectations for world economic growth, which it said highlighted the need to curb production While demand for oil will continue to rise, Opec warned that the market will be in surplus thanks to growing production from US shale oil.
Asian equity markets were mostly higher as the region sustained the momentum from Wall Street with the S&P 500 back above 3000 and the Dow Jones above 27k. US President Trump has delayed the next round of tariffs on USD 250bln of Chinese goods to October 15th from October 1st which saw the spike in the futures prices, with the S&P futures hitting 3019 before dropping back a bit.
Easing Up on Iran
Trump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month, prompting then-National Security Advisor John Bolton to argue forcefully against such a step, according to three people familiar with the matter. The White House has started preparations for Trump to meet with Rouhani on the sidelines of the annual United Nations General Assembly in New York during the week of Sept. 23, although it’s far from clear if the Iranians would agree to talks while tough American sanctions remain in place. Trump sitting down with Iranian leaders — should it actually happen — would break more than four decades of U.S. policy. Bolton’s ouster on Tuesday improves the odds of a meeting.
Market Open
U.S. and European equity futures rose along with Asian stocks on signs of goodwill from both Washington and Beijing on trade. Wall Street stocks reached the highest since July yesterday. The dollar rose and Treasuries were little changed. U.S. stocks rallied as the rotation from momentum to value shares that began at the start of the week slowed. Crude oil plunged after Trump indicated that sanctions on Iran could be eased. The president earlier urged the Federal Reserve to cut interest rates to “zero, or less,” in a tweet, while China moved to lessen the trade war’s repercussions by announcing a range of U.S. goods to be exempted from 25% extra tariffs put in place last year.
FTSE 100 Trading Signals, Forecast and Prediction
It’s all eyes on the ECB at 12:45 today and what if any further stimulus measures will be adopted/announced. The press conference with Draghi follows on at 13:30 so we may well see a rise in prices as we go towards both of these events (buy the rumour, sell the news). In a positive sign for the bulls, the SP has broken above the 3005 resistance level, albeit helped by Trump’s remarks on delaying the tariffs by two weeks.
The FTSE managed to reach the 7390 resistance level overnight and has dropped back a bit from there, though I am thinking that we may well see a retest of that level today. The bulls will be keen to build on the rise we have had since Monday though the 7450/7500 area is showing as daily resistance for the moment so we may still get a drop back, just maybe from a bit higher up. If the bulls were to break above the 7390 level today (maybe the ECB will help) then I am expecting us to hit that 7450 area. Both of the daily Raff channels are heading up again now so the trend for the moment remains bullish.
Initially we have decent looking support at the 7360 level on the 30min chart. Should the bears manage to break below this then we will most likely drop down towards the next cluster of supports at 7300, with a pause at the daily pivot at 7327. We have the Hull moving average on the 2 hour chart at 7295 and also the coral at 7276 there. More importantly, we also have the 200ema on the 30min and also S1 at 7298, so should we drop that low today then this area may well hold.
Of course, if the ECB disappoints then we may well see even more bearishness, and if the S&P starts to retrace that rise it has the potential to drop down towards the 2945 level where we have the 25ema on the daily chart.
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