Quote from Nick on 15th June 2020, 9:18 am

FTSE 100 live outlook prediction analysis for 15th June 2020

• The UK economy shrank by a record-shattering 20.4pc in April
• All sectors plunged, with construction particularly severely hit
• Accommodation and food services output dropped 88pc in first full month of lockdown
• April’s slump could represent rock-bottom for the economy – in charts
• European markets bounce back after sharp drop yesterday

The economic destruction triggered by Britain’s first full month of lockdown has been laid bare, with figures showing GDP dropped by 20.4pc month-on-month. The fall – which builds on an initial slump in May – means the economy shrank by roughly a quarter between February and April. Overall output during the month was at the lowest level since 2002. April’s GDP drop dwarfed the financial crisis, when the peak-to-trough fall was about 7pc.

The US Federal Reserve has said that the path ahead for the economy is extraordinarily uncertain, adding that some small businesses and highly leveraged firms might have to shut down permanently or declare bankruptcy.  It also said that disruptions to global trade may also result in a costly reconfiguration of global supply chains.

Resurgence Fears

There are fears the coronavirus pandemic is resurging as economies continue to reopen after lockdowns. Beijing shuttered the city’s largest fruit and vegetable supply center and locked down nearby housing districts as dozens of people associated with the wholesale market tested positive for the coronavirus. Meanwhile, Tokyo disclosed its highest daily total of new coronavirus cases since May 5 at 47, local media reported. In the U.S., Governor Andrew Cuomo warned New Yorkers against triggering a second wave of the coronavirus, singling out bars and restaurants in Manhattan and the Hamptons as the worst offenders. Still, New York’s new deaths fell for a second day though Florida’s cases outpaced the weekly average for a fifth straight day. A former top U.S. health official said new outbreaks are now occurring. Over in Europe, French President Emanuel Macron is accelerating the pace of reopening, while British Prime Minister Boris Johnson launched a review of social-distancing rules as he tries to encourage consumers to go out and “shop with confidence.”

Market Open

S&P 500 futures declined at the open in Asia Monday, and the Australian dollar slipped as investors monitored China’s latest coronavirus outbreak. Stocks headed for a mixed start in Asia after gains on Wall Street Friday. The yuan and the euro also edged lower, the standout moves in currency markets as trading began for the week. Concerns about a second wave of the coronavirus is keeping traders on edge and helped push global equities lower with Treasury yields last week. Oil fell.

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

U.S. futures retreated along with Asian shares and the dollar climbed against major peers as investors gauged the danger of a second wave of coronavirus infections. S&P 500 futures were down about 1.5%. Stocks in Hong Kong saw the bulk of selling, with losses also in Australia, Japan and South Korea. Declines were pared after key Chinese data showed some signs of economic improvement. More than 20 U.S. states are seeing a pick-up in cases, Tokyo reported a jump over the weekend and a fresh outbreak in Beijing prompted officials to close a market there. Second-wave concerns had pummeled shares on Thursday before a modest rebound Friday. Crude oil prices slid, and Treasuries climbed.

We start the week with the inevitable news that C-19 cases are spiking in China and we may well be at the start of the second wave. As expected this has unsettled markets in Asia and the futures here. As with the Spanish flu its not the first outbreak you need to worry about! As such, the market will be worried about the knock on effects of the second outbreak as governments will not be able to bail everything out indefinitely. Can the flare ups be contained with quick responses and lockdowns?

To start the week we are at 6000 as I write this having recoiled from Friday's high at 6185 and dropped off from there, and we may well see the bulls want to defend this round number. We also have the 20 day Raff channel bottom here, then the 10 day just below at 5970. However, should we dip below this 5970 then the daily support at 5911 is next up and we may well see a hold of this, if we get that low. We also have S2 at 5890. As such I have put a long for my plan here, though we may see an early bounce off the 10 day Raff channel at 5956 - all depends on how the market sees this second wave playing out.

If the bulls were to get their skates on then we have 30min resistance at the 6065 to 6080 area, and we may well see any rise stall in this area, though a possible overshoot to the daily pivot at 6096. If the bulls were to break above this then 6150 is the fib level though that does seem a bit of a big ask today against a bearish Asian session and negative news. A second wave is certainly going to spook a lot of people!

Interestingly gold hasn't risen that much so far on the news either. For the S&P we have the daily 200ema at 2965 as some initial support, with S2 at 2931 below that. The 2 hour chart remains bearish and the rise on Friday failed to reach the moving average resistance which has now dropped to 3064 for today (and moving lower steadily). Therefore any rally to this area is worth a short. We are also just seeing a break below the Raff channels as I am writing this.

So, looking to see of the 5956 10 day Raff channel can support the FTSE at least to start with, as while wiring this we have now moved below 6000. If that breaks then a drop down towards 5890 looks distinctly possible. Lower down we do have the green, untested, daily coral at 5745 as well. A major sell off could of course get that low quite easily.

For today a rise to the 6080 area looks to be a good rise and dip scenario for today, if the bulls step up this morning, otherwise a drop to 5900 initially. Fear taking hold again. Good luck today.

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