26th September 2019
- Political crises shake markets after Boris Johnson is defeated in Supreme Court and Democrats begin impeachment proceedings against Donald Trump
- Sterling hits lowest level in a week as sentiment turns sour
- FTSE pulls back from biggest fall for over a month as weak pound support exporters
European shares snatched defeat from the jaws of a major rout on Wednesday, swinging back from deep losses in the final hour of trading after Donald Trump, the US president, once again insisted that progress was being made on a trade deal with China.
The Europe-wide STOXX 600 recovered from losses as big as 1.3pc, to close the day 0.58pc down following Mr Trump’s claims that an agreement on commerce between the world’s two largest economies could arrive “sooner than you think”.
The boost, which came with just an hour left of trading, gave the FTSE 100 the extra juice it needed to finish the day flat, down 0.02pc at 7,289.99.
The blue-chip index had been on track for its sharpest fall in over a month earlier in the session, but a steadily declining pound, which was sat at near two-week lows against the dollar at the end of London trading, offered support to the exporter-heavy index.
There was a widespread recovery among London’s biggest mining firms, many of which had slipped on Tuesday after China’s central bank said it was unlikely to engage in monetary stimulus in the near term.
Trump Transcript
The White House has released a memorandum of a call between U.S. President Donald Trump and Ukraine President Volodymyr Zelenskiy, which is at the center of an impeachment inquiry into Trump. The rough transcript reveals Trump sought to enlist a foreign government’s aid in his re-election campaign by investigating Joe Biden, the front-runner to challenge him; to use his own personal lawyer to sidestep diplomatic channels; and to deploy the top law enforcement officer in the U.S. to assist a patently political endeavor. Trump defended the call at a news conference to conclude his participation in the United Nations General Assembly. “I didn’t threaten anybody. No push, no pressure, I didn’t do anything,” he said. He didn’t directly answer repeated questions about why Americans should consider it appropriate for the president to seek information on a political rival from a foreign leader.
Markets Up
Stocks in Asia looked set to push higher Thursday as signs of easing trade tensions overshadowed impeachment inquiry proceedings in Washington. The dollar climbed the most since March and Treasuries retreated. Trump said a trade agreement with China is getting “closer and closer” and there’s a “good chance” a deal can be reached. Beijing is starting to make big purchases of items such as beef and pork, the president added. He also expressed progress on trade talks with Japan. Elsewhere, oil extended declines as the EIA said U.S. crude supplies rose 2.41 million barrels last week. European equities fell back Wednesday amid rising concern that growth is flagging.
The Other Trade Deal
President Donald Trump and his Japanese counterpart Shinzo Abe signed the “first stage” of an initial trade pact after meeting at the United Nations General Assembly in New York, which eases access for $7.2 billion in U.S. agricultural goods. The U.S. has withdrawn the threat of imposing auto tariffs on the Asian nation for now, a key sticking point in the more than year-long talks. Trump told reporters the trade deal between the two countries will help U.S. farmers by opening up Japan’s agricultural market, and said that he expects “in the fairly near future” that the U.S. will have “final comprehensive deals signed with Japan.”
FTSE 100 Trading Signals, Forecast and Prediction
I am still looking at the S&P climbing towards the 3000 level or just above before a drop back tomorrow/Monday for the end of the quarter.
For today I think the bulls will be keen to build on the rise yesterday, and indeed the 2 hour chart is now bullish with support at this 7280 level. The bulls will be keen to break above the 7305 coral line, but that means that we will likely see a rise towards the fib level at 7331 and R1 at 7340. This may well tally with the 3000 level on the S&P. However, should they push past 7340 then I would expect a test of the 7377 level, and possibly even 7400, especially if cable were to drop significantly.
Talking of cable, looking at the daily chart a drop down to the 12150 looks possible, and we still have resistance at the 12650 level for the moment.
Back to the FTSE and if the bears were to break below the 7280 level then a drop down to the 7231 fib level looks likely again, and of course yesterdays low at 7213 is also an option. Below this then 7178 is next up where we have S2.
Watch for 3000/3010 on the S&P as resistance – the latter being the top of the 10d Raff channel.
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