Quote from Nick on 4th May 2020, 9:13 am

FTSE 100 live outlook prediction analysis for 4th May 2020

Asian equity markets began the week mostly lower as concerns mount over US-Chinese tensions and activity at the inter-Korean border. Weighing on the futures prices, also US President Trump said tariffs would be the ultimate punishment on China and warned that that if China doesn't buy US goods, the US will end the trade deal. Meanwhile, US Secretary of State Pompeo stated that there is enormous evidence that the coronavirus outbreak originated in a laboratory in Wuhan.

Friday recap:

• The final UK manufacturing PMI reading for April droped to 32.6
• The FTSE  100 slumped a further 2.3pc following its worst day in a month
• US markets fell after sobering updates from Amazon and Apple
• RBS's profits were cut in half after it set aside £802m for bad loans
• Ryanair said it is looking to cut 3,000 jobs, predominantly pilots and cabin crew

Warren Buffett

Warren Buffett is treading more carefully this time around. With a record $137 billion of cash piled up at Berkshire Hathaway, Buffett fielded questions over the weekend from shareholders who wanted to know why he hadn’t acted as companies clamored for liquidity amid the pandemic-related shutdowns. This crisis is different, Buffett said. The famous investor’s reputation allowed him to serve as a lender of last resort during the 2008 financial crisis, racking up deals that generated 10% annual dividends from household-name companies. But as panic about the virus and shutdowns assaulted equities in March and even began to freeze debt markets, the Federal Reserve beat him to the punch with an unprecedented set of emergency measures. While Berkshire bought back $1.7 billion of its shares in the first quarter, it was a net seller of stocks through April as it shed stakes in four major U.S. airlines.

Virus Update

U.S. cases increased 2.3% in the past 24 hours, below the one-week daily average. Gilead Sciences plans to get its drug remdesivir to patients within days after getting U.S. backing for emergency use. New York added the fewest new deaths in more than a month as hospitalizations declined. Russia reported more than 10,000 new cases, the highest number of the outbreak. The daily toll fell in the U.K. and Italy as leaders navigate reopening business without sparking new infections. Spain recorded the fewest deaths in more than six weeks. Meanwhile, the U.S. Secretary of State Michael Pompeo said “enormous evidence” shows the novel coronavirus outbreak began in a laboratory in Wuhan, China. And doctors debate the arrival time of a Covid-19 vaccine.

Market Open

Currency markets saw muted moves in early trading on Monday, though sentiment remained fragile after a rough start to the month for risk assets. The New Zealand dollar slipped along with the pound and euro, though moves for most major currency pairs were subdued. Trading volumes may be light due to the Japan holiday and Treasuries won’t trade until the London open. Equities traders will be watching the open for S&P 500 futures after global stocks posted a more than 2% slide on Friday. China is also shut for a holiday. Meanwhile, the first full trading week of May could be a test for emerging markets.

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FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

Stocks in Asia retreated along with U.S. and European futures, indicating the risk-off move that’s hit markets at the start of this month may have further to run. The dollar climbed.

S&P 500 futures declined as much as 1.8% at one point after global stocks posted a more than 2% slide on Friday. Shares in Hong Kong saw the bulk of losses, with those in Seoul and Singapore also dropping. The Sydney market edged up after tumbling the previous session. China’s yuan maintained Friday’s slide amid concern tensions with the U.S. are increasing.

The FTSE is starting the week on the back foot, but has bounced off the overnight lows at 5666 so far. Daily support is at 5709 for today, but we also have the S1 and fib levels at 5700. If this holds first thing then we may well see a bit of a climb today (and follow a similar path to the ASX200) and go for a gap close with Fridays closing price at 5763, initially at least. We also have the daily pivot at 5779 so looking for initial resistance around this area.

Should we dip slightly lower than 5700 then the overnight lows and S2 at 5660 would be the next key support level. The S&P has support at 2780 (10 day Raff) and the bulls will be keen to ensure that this doesn't break (during market hours) and we could well see a rise up towards the 2 hour resistance level. That is at 2900 but dropping steadily, so I have put a short in the trade plan just below this and above the R1 and 200ema level. The S&P is also on the bottom of its 10 day Raff channel at 2782 which has held overnight. So a rise today on that, again to close the gap, but also possibly to test the 2880 to 2890 area would make sense.

For the FTSE, once the gap is closed (if it does) then we could well see a bit more of a rise towards the 5865 area where we have the 200ema on the 30min chart, and also start getting towards the 2 hour resistance. As I write this its at 5915 but dropping steadily and may well tally with the 5860 level later on today. As such a short around this area would work well I feel, and would tie in nicely with that S&P resistance at the 2880/2890 level.

So, expecting a bit of a climb first thing, possibly from lower down, but also watching that 5700 support level initially.  Rise and dip to then play out today and also sets up a bear Tuesday for a further slide tomorrow, down towards 2730 S&P, and 5600 on the FTSE. Good luck today.

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