FTSE 100 Outlook for 8th October 2019
Europe’s main equity indices suffered a setback in morning trading after gloomy German industry data showed factory orders were 6.7pc lower in August than a year earlier. However, shares bounced back as the day progressed. In London, the blue-chip FTSE 100 gained 42.5 points, or 0.6pc, to close at 7,197.88. The mid-cap FTSE 250 lost 0.3pc to close at 19,420.24 points. Europe’s Stoxx 600 gained 0.7pc.
The next high street casualty could well be Pizza Express. It has hired financial advisers ahead of crunch talks with creditors over the restaurant group’s soaring debts, according to reports. Usual story of being asset stripped, passed from hedge fund to hedge fund who load it up with unsustainable debt and little in the way of assets, over expansion, over priced product and sky high rents.
The closely watched Sentix benchmark found worsening pessimism among investors in the Continent, with sentiment at its lowest for more than six years despite a major package of measures from the European Central Bank to stimulate growth last month. Its sentiment index dropped to -16.8 in October, the weakest level since April 2013 and down from -11.1 in September. Alongside the ECB’s resumption of money printing and decision to cut interest rates deeper into negative territory, the US Federal Reserve also trimmed rates for the second time in three months.
Mixed Markets
Asian equities traded higher across the board despite a lacklustre handover from Wall Street, HKEX dropped its bid for LSE and Samsung Electronics released its Q3 guidance. A weak U.S. session had investors mulled the upcoming U.S.-China trade talks. Treasuries slipped and the dollar gained. Investor focus will be on Chinese markets, which reopen after a weeklong holiday, as well as those in Hong Kong after escalating violence in the city. The S&P 500 Index ended the day lower after bouncing between small gains and losses in light volume, and the lira slumped the most since August, after Trump threatened to “destroy” Turkey’s economy if it acts in excess in a military operation targeting Kurdish forces in Syria. Elsewhere, oil was at $52.80 a barrel, and gold traded at $1,493.36 an ounce after falling 0.7%.
World Bank Worries
The World Bank is the latest voice to join the chorus of gloom over diminishing global growth prospects. At a Monday speech ahead of the IMF and World Bank annual meetings, the bank’s president, David Malpass, said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe. The world economy now looks even weaker than the bank’s June forecast for 2.6% growth in 2019, and the IMF has also indicated it may lower its 2019 outlook from after the fund in July projected 3.2% growth – the lowest since the financial crisis. The IMF is preparing to release its updated forecast next week.
Boost for Boris
As Brexit negotiations resumed in Brussels, Boris Johnson got a boostfrom the courts. A Scottish judge ruled in the prime minister’s favor in a case that could have forced him to obey a law requiring a delay to Brexit if he can’t reach a deal. But the lift may only be short-lived. The judge ignored the prime minister’s frequent assertions he won’t seek an extension and instead relied on assurances from government lawyers that he would obey the law. That may make it harder for Johnson to leave without a deal on Oct. 31. Meanwhile, pound traders are turning increasingly bullish on the currency’s prospects into the Oct. 17-18 European Union summit, derivative prices show. Demand has picked up for options targeting a stronger sterling in the short term – two-week pound-dollar risk reversals, the premium on bullish options over bearish ones, are set for the highest close since May.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction
Interesting little move up and then swiftly back down yesterday evening saw the FTSE 100 test the 7215 resistance level level we had pencilled in above the 7185 level, and the S&P spiked up to just above the daily resistance at 2955 before recoiling. On the FTSE we haven’t tested the daily resistance as yet at 7264 but should we get this high then shorts around this area make sense. Would also tally with the S&P rising a bit further towards 2970.
For today, the 7185 area is now support from the 200ema on the 30min chart, along with the pivot just below here at 7179. The 2 hour chart remains bullish after yesterday’s bull Monday run, and is showing support lower at 7109 and 7080.
The Brexit saga rumbles on with deal/no deal depending on what way the wind is blowing. Not long to go to deadline day now – last minute deal in usual EU style? Take it to the wire/11th hour/last minute/call it what you will.
The bulls have fought back valiantly from the 7007 test on the 3rd October with a decent 200 point rise. Of course, with that 200ema on the daily at 7286 currently that may well cap the bounce, or just above here. The top of the 10 day Raff channel is at 7344 as well.
The bears will be keen to move it below 7180 though today and that opens up a test of those lower supports, mostly the 7080 level. there is however 7140 looking fairly strong with S1 and the fib here so we may well see a bounce here, should the bears take control today. Below the 7080 level then the 6980 level is the bottom of the 20 day Raff channel.
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