Quote from Nick on 8th February 2021, 10:45 am

FTSE 100 live outlook prediction analysis for 8th February 2021

The FTSE 100 was a rare sore spot on global equity markets Friday, as US stocks pushed to fresh highs despite a poor jobs report on expectations it would boost the case for a significant stimulus lift. The S&P 500 rose for a fifth day, to hit an all-time high, in its best weekly performance since November.. The US added 49,000 non-farm payrolls in January, well short of the 105,000 predicted by economists. The unemployment rate fell to 6.3pc from 6.7pc, despite expectations it would not change. A downward revision to December figures underscored the pain, with the reading adjusted to 227,000 jobs lost rather than the 140,000 initial reading.

Despite the disappointing outcome, investors doubled down on US stocks, with the energy and materials sectors performing strongly. Their enthusiasm was buoyed by anticipation that weak economic figures will build the case for a significant stimulus boost from the US government.

Oil continued its gains on hopes of a recovery in global demand, with Brent crude continuing to edge closer to $60 a barrel – a level last seen in January last year. The joy did not extend to London-listed stocks, with the FTSE 100dropping 14.39 points to 6,489.33 amid a slight strengthening in the pound.

Trouncing Wall Street

China’s army of tiny hedge funds are pulling further ahead of their better-known foreign competitors with outsized gains helping them attract more assets. The nearly 15,000 funds offered by Chinese managers returned 30% on average last year, with the best-performers surging 10-fold, according to Shenzhen PaiPaiWang Investment & Management Co. That dwarfs the average 12% gain for hedge funds globally. The out-performance is another impediment to global funds such as Bridgewater Associates and Two Sigma, which have struggled to make inroads into China’s 3.8 trillion yuan ($588 billion) hedge fund market since it was opened to foreign firms four years ago.

Muted Open

Stocks looked set for a muted start after climbing to a record high last week, with investors monitoring signs of progress on the coronavirus front and comments from Janet Yellen pushing the U.S. relief bill. Futures pointed to a mixed start for equities in Japan, Hong Kong and Australia. The S&P 500 Index hit an all-time high on Friday, closing up almost 5% on the week and 10-year Treasury yields ended around 1.16%. The Australian dollar edged lower in early Monday trading, with the greenback mixed against G-10 peers.

Pushing the Package

Treasury Secretary Janet Yellen said the U.S. can return to full employment in 2022 if it enacts a robust enough coronavirus stimulus package, but otherwise risks a slower rebound in jobs and the economy. Without adequate support, it could take until 2025 for the U.S. labor market to recover, Yellen said on CNN’s “State of the Union.”  President Joe Biden’s $1.9 trillion stimulus plan isn’t specifically aimed at job creation, Yellen conceded, but she said that “the spending it will generate will create demand for workers.” That's put her at oddswith former Treasury Secretary Larry Summers, who says Biden’s  package may be too large and came with “big risks,” including inflation.[Bloomberg]

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US & Asia Overnight from Bloomberg

Global equities reached another record and Treasury yields rose after Janet Yellen pushed for rapid U.S. stimulus and coronavirus infections slowed across the globe. The dollar steadied after Friday’s slide.

U.S. and European futures advanced after the S&P 500 closed at a record on Friday. Most Asian stocks climbed. Japan’s Topix index jumped the most in more than two months to close at its highest since 1991 amid reports that the government may lift its state of emergency early for some areas.

Treasury Secretary Yellen said on Sunday talk shows that the U.S. can return to full employment in 2022 if it enacts a robust enough relief package. Ten-year Treasury yields crept higher toward 1.2%. The pace of U.S. inflation implied by the bond market advanced to its highest level since 2014, as crude oil prices rallied. Brent oil rose above $60 a barrel for the first time in a year.

Investors are taking comfort from the continued rollout of vaccines and data suggesting a declining trend in infections in countries like the U.S. and Germany. A Citigroup Inc. gauge of global risk aversion has dropped to its lowest since the pandemic first roiled markets last year.

While the weaker-than-forecast U.S. jobs data Friday reinforced the fragility of the recovery as the pandemic lingers, it also highlighted the case for further stimulus.

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

Another Monday and another gap up on the S&P as we push up to new highs again on that. 3911 area for R2 looks like it might well be tested shortly and we may well see a stutter at this area, possibly a bit higher at R3 3923. The gap from Friday is at 3890 so we could see a pull back to this area with that becoming support and its also just above the daily pivot for today. The FTSE continues to lag the others, still 400 points off its January peak, and still has the 25ema on the daily as resistance to watch at 6581 for today, with daily resistance at 6600 just above.

Initially on the FTSE 100 we have strong resistance just below those daily levels at 6555 with R2 and daily resistance here. As such we may well see any initial climb stall there and then a bit of a drop back to the 30min coral which has gone green at the 6510 level. That also ties in with the 200ema and just below the 2 hour support (6520) as well.

Above the 6555 level then 6581 as mentioned, and then above that the R3 level of 6589 would come into play. The top of the Raff channels are also getting closer with the 20 day channel top at 6635 and the 10 day at 6650. I am not thinking that we get that high today, as I do like 6555 for an initial reaction and then the 6580/6600 area after that.

For support below the 6505 level then 6493 is the daily pivot, with S1 at 6467 below that. That is also just above the daily support level of 6450.

I wouldn't be surprised if we get a bit of a drop back shortly on the S&P once the stimulus bill is approved/digested. As per usual there is only so long it goes on making record highs before we see a turn back down. Is the FTSE 100 the realist or the laggard though that is the question..... could be the one with its feet on the ground at the moment and it will be interesting to see if the 25ema gets a reaction at the 6580 area. The bounce we are in from the 200ema on the daily at 6350 has run well but may well stall shortly.

So, watching the 6550 and 6450 levels as the main range for the moment. with 6580 above as resistance. 6500 area as initial support. Good luck today.

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