Quote from Nick on 26th January 2021, 10:04 am

FTSE 100 live outlook prediction analysis for 26th January 2021

European stock markets tumbled after pharma giant Merck announced it was scrapping its vaccine development efforts – potentially delaying a global rebound from the Covid-19 pandemic.

The FTSE 100 and 250 both dropped as part of a broad-based sell-off led by poor performances for travel stocks.

Stocks traded fairly flat at the beginning of the session, but took a sharp downward turn after the US company said it would abandon its efforts to create a vaccine following disappointing trial results.

British Airways owner IAG led blue-chip fallers, although it was among the stocks to take a smaller hit from the broad shift. Having already been about 7pc down on fears of tightening global restrictions before Merck’s announcement, it closed down only slightly further, falling 1.6p to 140p. Joining it were several other companies likely to suffer from tighter restrictions, which are expected to come into place in several parts of Europe in the coming days as governments scramble to contain local outbreaks of Covid-19.

Xi Address
President Xi Jinping called on the world to abandon “ideological prejudice” and shun an “outdated Cold-War mentality” as he signaled that China will continue to forge its own path regardless of western criticism. It’s vital to stay committed to international law and international rules “instead of staying committed to supremacy,” Xi told the Davos Agenda event, in his first address since Joe Biden entered the White House. “Confrontation will lead us to a dead end,” he said, and urged a return to mutual respect to help recovery from the pandemic. The Biden administration said it was approaching ties with Beijing with "patience" and will review Donald Trump's actions, including tariffs and company delistings.

Choppy Market
Asian stocks looked set to slip after a choppy U.S. session as investors mulled the timing of further stimulus amid gains for technology shares. Treasury yields fell and the dollar pushed higher. Futures pointed to modest declines in Japan and Hong Kong, and were little changed in Australia. The S&P 500 Index ended higher, though gains were limited after the top Senate Democrat said an aid package was unlikely before mid-March and a U.S. health official expressed concern about vaccination delays. Elsewhere, crude oil climbed toward $53 a barrel and gold fluctuated. European stocks retreated. Bitcoin rebounded above $34,000 before paring the advance.

Covid Ranking
People are finally getting shots, but the biggest global vaccination campaign in living memory has yet to reach a point where it’s causing meaningful shifts in Bloomberg’s Covid Resilience Ranking, a measure of the best — and the worst — places to be in the coronavirus era. Israel and the United Arab Emirates, which lead the world in inoculating against Covid-19, have been propelled into the top 15 due to the fast pace of their vaccine rollouts. Top performers like New Zealand, Australia and Taiwan haven’t been hurt by the fact they’ve not yet started vaccinating their populations, as low community transmission and balmy weather helps maintain their Covid edge.[Bloomberg]

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US & Asia Overnight from Bloomberg

Stocks fell along with U.S. futures Tuesday as investors mulled a possible delay in the planned U.S. fiscal-relief package against a backdrop of concern that some markets are overextended. The dollar advanced.

A gauge of Asia-Pacific equities at one point slid the most in about two months, with shares in South Korea and China underperforming. Tencent Holdings Ltd.’s slump led Hong Kong stocks lower after the internet giant’s market value rose to the cusp of $1 trillion for the first time Monday. The People’s Bank of China unexpectedly withdrew funds from the financial system as an advisor discussed the risk of asset bubbles in local media.

S&P 500 futures slipped as Senate Majority Leader Chuck Schumer said an aid package was unlikely before mid-March and a U.S. health official expressed concern about vaccination delays. Nasdaq 100 contracts also pointed lower, with investors awaiting earnings from some of the biggest companies.

Elsewhere, Treasuries held an overnight climb and crude oil fluctuated under $53 a barrel. European equity futures were little changed.

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

The S&P bulls defended the 3800 level yesterday but the bears do seem to be testing their resolve at the moment. The FTSE 100 has dipped below the daily support at 6635 as well, in a further sign that the bottom of the 20 day channel ay well soon be tested. The bottom of the 10 day channel is at 6610 for today, coinciding with yesterday's low, so I am looking for an initial defence of that, otherwise we will head below 6600 with 6565 the next key support level. 6611 is also S1 to start with and if the bulls are going to pull something out of the bag then they will need to do it around this area. Even more so the S&P bulls!

Talking of the S&P there is now 30min resistance at the 3846 level with the red 30m coral here and as such if we do see a rise to here then we may well see the bears try again today. Bull Mondays seem to have jumped ship so far in 2021, but we may well have a more bearish Tuesday today. That said if the bulls were to break above the 3850 level then the recent high at 3865 and 3880 are next up. On the flip side, a break of 3800 gets it more bearish and a slide down to S2 at 3773 may well materialise.

Back to the FTSE 100 and if the bulls were to push above the 6665 level then 6710 is the key fib level and just above the 2h coral at 6701, with 6767 above that. Seems a big ask to get that high today as the 10 day Chanel is heading down now, but never say never!

For the bears, a break below 6600 leads to the next daily support at 6565, and just above R2 at 6554, with the 20 day Raff below that at 6520. And then things start too look more bearish. I am still thinking that the bears are going to have their time till the end of February and then another rally kicks in, maybe triggered by the continued vaccine roll out, slight easing of lockdown measures announced for late March to inject a bit of enthusiasm into things, or something like that. Maybe! Of course we could still just be locked down till June!

Good luck today.

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