Quote from Nick on 30th March 2021, 8:53 am

FTSE 100 live outlook prediction analysis for 30th March 2021

A senior regulator has warned that the financial system must be protected from hedge funds making high-risk bets, after a crisis at a US investment firm saddled two major banks with massive losses. Alex Brazier, the Bank of England’s executive director for financial stability strategy and risk, said that “guardrails” may be needed to prevent the actions of a few traders from contaminating the wider market.
He spoke out after global banks Credit Suisse and Nomura were hammered by a $20bn (£15bn) fire sale sparked by hedge fund tycoon Bill Hwang’s family office, Archegos.

Credit Suisse said the impact could be “highly significant and material to our first quarter results” and Nomura is bracing for a $2bn blow.
Mr Brazier said officials at Threadneedle Street are closely monitoring the Archegos situation.

Archegos was forced to sell billions of dollars of shares to raise cash so it could cover losses from market bets that went wrong. The sale at the end of last week contributed to a market rout that wiped more than $35bn off a string of major global stocks. It raised fears that so-called family offices such as Mr Hwang’s are operating with little oversight and have dangerous ties to the wider banking system. Family offices manage the wealth of just a few ultra-rich individuals and are not held to the same strict rules as firms which look after money on behalf of larger groups.

Fallout Fears

What might be the largest margin call in history is ringing fresh alarm bellson Wall Street among those worried about hidden leverage and its potential to fry the financial system. The forced selling of the apparently swap-linked shares at Bill Hwang’s Archegos Capital Management has set off a hunt for other areas of excess — from margin debt to options and bloated balance sheets — after stocks at the center of a $20 billion block-trade selling spree plunged and investment banks warned of losses. So far, Credit Suisse and Nomura have told shareholders their businesses face “significant” losses. It was only last April that Hwang quietly got the SEC to remove some of the shackles that had been placed on him years earlier as part of an insider-trading settlement. Regulators should have seen this fiasco coming, argues columnist Eliza Martinuzzi. Timothy L. O'Brien is reminded of Long-Term Capital Management's 1998 implosion.

Market Wrap

Asia stocks are set to open firmer after U.S. equities bounced off session lows as investors weighed rapid progress on the U.S. vaccine rollout against the risk of further block-trade fallout. Financials dragged the S&P 500 Index slightly lower on the Archegos revelations, but broader markets have seen only small ripples so far. Futures pointed higher in Japan, Australia and Hong Kong. The dollar and oil rose, along with Treasury yields.[Bloomberg]

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US & Asia Overnight from Bloomberg

Asia stocks drifted and Treasury yields climbed as investors weighed rapid progress in the U.S. vaccine rollout against the risk of further blow-back from the implosion of Archegos Capital Management.

Shares rose in China and Hong Kong while Japan’s index fell, led by banks. Nomura Holdings Inc. said it’s too soon to estimate the impact of losses tied to a U.S. client, identified by Bloomberg as Bill Hwang, head of the troubled investment firm. U.S. futures fluctuated as traders assessed broader Wall Street exposures. Earlier, the S&P 500 Index lifted off lows on President Joe Biden’s announcement that 90% of adults will be eligible for the Covid-19 vaccine next month.

Ten-year Treasury yields rose to 1.74%, and the five-year hit its highest point in a year. Australia’s benchmark yield jumped 10 basis points. The U.S. dollar held steady.

Ripples are barely detectable in credit markets so far, though traders are demanding higher rates to hedge potential losses on the debt of banks caught up in the Archegos situation, including Nomura and Credit Suisse Group AG. Archegos said that “all plans were being discussed.”

Investors have been focusing on the strength of the recovery and inflation risks as governments step up spending to spur growth. Later this week, the U.S. president plans to unveil a further stimulus program with a tilt toward infrastructure. Positive news on vaccines is helping risk appetite, with a real-world study from Pfizer Inc. and Moderna Inc. showing their doses effectively prevented coronavirus infections, U.S. government researchers said.

Oil fluctuated as traders looked to this week’s OPEC+ meeting, with speculation that renewed demand concerns will push the group to keep production in check. Meanwhile, the Suez Canal reopened to traffic after the container ship blocking it was tugged free.

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

We may well see a test of the 6785 level again today and if the bulls can break that then we should get a test of the R1 and key fib level at 6799, with the daily resistance from the 10d Raff at 6825 above that. The ASX200 had a very bearish day though and that may well weigh on the FTSE today, so it's possible that we get a dip and rise play out.

The initial support is with a green 30m coral at 6757, and the daily pivot just below that at 6751. The bulls will certainly be keen to defend this initially and to build on the late rise yesterday. The 2 hour chart remains bullish and we haven't tested the green coral line yet which has support at the 6708 level. The 2h charts on both the Dax and the S&P are also bullish with support at 14705 and 3921 respectively from the green coral lines.

The S&P held the 3950 support area yesterday for a rise back to Fridays end level at 3977, where it has remained overnight. Possibly consolidating a bit here before another push after all. 4000 maybe not out of sight just yet after all!

If the FTSE bears break the 6750 daily pivot today then a drop down to 6725 where we have S1 and the 30m 200ema (and just above that 2h support) looks like it will play out and we may then see a bounce here. 6708 is also the 25ema on the daily chart and whilst not the first test of that should we see it, it lends weight to a possible bounce here.

However, if the bears really go for it and break below the 6700 level then we may well see a slide down to the 6620-6640 area and an area that we would really need to hold. April can usually be a bullish month (prior to sell in May, go away) and the bulls certainly wouldn't want to see a significant slide.

So, looking at a dip and rise pattern today, a lot will depend on the S&P and if it can defend the 3940 level if it drops that low. Watching 6750, 6720 as support level for the FTSE, 6785, 6800 and 6825 as resistance.

Good luck today.

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