FTSE 100 live outlook prediction analysis for 26th October 2020
- UK PMIs indicate growth slowdown
- Companies continue job cuts ahead of furlough end
- Eurozone sees divergence as manufacturing grows and services slow
- Retail sales beat expectations with 1.5pc month-on-month rise
- Only clothing stores lag as non-food retailing completes recovery
- Barclays beats earnings expectations
- Pub chiefs say £13bn rescue package won’t ease winter misery
London ended the week on a high, with the FTSE 100 adding almost 70 points to about 5,852, or 1.1pc higher. The index lost some ground in the afternoon however after being up about 1.6pc earlier in the day. Barclays was the biggest riser, up more than 6pc, with Lloyds Banking Group, HSBC and Standard Chartered also posting respectable gains. Pearson and InterContinental Hotels too the wooden spoon with falls of almost 2pc.
Across the pond the S&P 500 and the Dow were modestly higher, with investors expecting progress in talks on the next coronavirus aid bill as the presidential election draws ever closer. The Nasdaq, however, was weighed down by a 10pc slump in chipmaker Intel after it reported a drop in margins as consumers bought cheaper laptops and businesses clamped down on data centre spending.
Futures have however declined Sunday night as sentiment shifts more bearish ahead of the election and with the virus weighing on global economies.
Virus Unchecked
The U.S. reached a record number of coronavirus infections for the second day in a row, adding another 85,317 cases. President Donald Trump’s chief of staff said the U.S. isn’t going to “control” the pandemic. Spain announced a national curfew while Italy introduced the strongest restrictions since the end of a national lockdown in May and French infections hit another record. U.S. Vice President Mike Pence’s chief of staff tested positive, as did the Reserve Bank of India’s governor. With the virus untamed, it may be time to reset expectations for the world economy.
‘Moving the Goalposts’
Nancy Pelosi and White House Chief of Staff Mark Meadows accused each other of “moving the goalposts” on stimulus legislation in back-to-back Sunday interviews on CNN, showing why there’s so much pessimism among U.S. lawmakers that a deal can be reached before Election Day. If no coronavirus relief bill is passed before the election, Pelosi said House Democrats would keep pressing for an agreement in the lame-duck session after the election. She said they would not wait until January
Market Open
The U.S. dollar edged higher at the start of the week as U.S. coronavirus infections rose. Asia stocks were set for a muted open: Equity futures edged up in Australia and were little changed in Japan, while Hong Kong is closed for a public holiday Monday. The British pound advanced after trade talks between the U.K. and the European Union were extended to Oct. 28. S&P 500 futures opened weaker. U.S. stocks rose Friday. Treasuries advanced as rates traders are questioning the big shortposition that’s built up in long-maturity Treasuries on the expectation of a Democratic sweep in next month’s U.S. elections. Oil dropped.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
U.S. equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asian stocks drifted and Treasuries advanced.
S&P 500 futures retreated, and European contracts pointed lower. Stocks slipped in Japan and South Korea, with shares in China underperforming. The dollar strengthened. U.S. House Speaker Nancy Pelosi said the chamber could pass a pandemic relief plan this week, though a deal with the White House remains elusive as chances faded of a resolution before next week’s election. Ten-year Treasury yields ticked lower, but remained above 0.8%.
Elsewhere, oil extended a decline. U.S. stocks rose Friday as investors held out hope for a spending package.
Starting off on the back foot this morning for a bull Monday but they may well just shake this off and we get the usual pattern. Initial support this morning is at the 5800 area where were have S1 and a key fib, and just above the 2hr support line as 5791 (and rising). It was this 2 hour support that we climbed off on Friday (5783) and a further test may well hold again.
The S&P is also sat on its 2 hour support as I write this at 3436 and with the moving average and also a green coral here we could see this level hold as well, though there is also support just below at 3420. The US bulls have been pretty resilient so far, but the election looms closer now, with Trump casting his vote in Florida and this week could be a bumpy road! We will also have further stimulus news this week, just to keep it extra lively. Below 3413 (S3 for today) then the bears will be looking to take it down to 3370 and the bottom of the 20d Raff channel. Bulls will want to push it up towards the Friday high at 3465 and above hat to target the 3500+ level.
For the FTSE, if the bears were to break below the 5790 level then a retest of the 5770 level looks likely in fairly short order, with 5745 below that. If they really start taking control this week then we may well see a slide down towards there 5695 level and the bottom of the 20 day Raff though I am not expecting us to get that low today.
For the bulls, they will want to push this up towards the 5890 level where we have the key fib, and also Fridays high, though a break above this would likely see a test of the longer term daily resistance at 5915. This is also just above R1 which sits as 5908, so I have put the short order here allowing for a bit of an overshot as it may well do. Above 5915 then 5950 is R2, though the bulls might start to get some momentum and a push towards the 6000 level and the top of the 20 day Raff channel over the next week or so.
A lot will depends on the elections, stimulus and virus this week. Might be worth reducing the risk a little bit too, or even go for smaller stakes as we have a rocky week ahead.
So, watching 5800, 5771, 5745 and 5695 as the main supports. 5890, 5915, 5950 as the main resistance levels. Good luck today.
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