FTSE 100 Outlook and Analysis for 15th October 2019
Stock markets across Europe closed in the red, though what temporarily appeared to be a session of steep losses improved somewhat after signals from Beijing were judged to be more favourable that had first been thought. That coincided with the 7200 support level which held, but didn’t get too exciting for the bulls.
On the trade-war front, markets were rattled early in the day following reports that China wished to conduct further talks with the US before ratifying a new arrangement on customs between the two countries. It was a remarkably more neutral tone than had been struck by Donald Trump, the US president, last week, when he claimed the two sides had reached “the greatest and biggest deal ever made”.
Combined with eurozone-wide data that showed year-on-year industrial production had fallen to its lowest level of 2019, and continental stock markets were rattled.
They pared back losses later in the day, however, after China’s state-run Global Times reported Beijing said talks had reached a breakthrough last week, and claimed both sides “have the strong will to reach a final deal”. None the less, the mood was risk-off, with miners suffering, while safe-haven assets such as gold and the dollar strengthened.
In the end the FTSE 100 was the biggest loser out of Europe’s major indices, finishing the day down 0.46pc, or 33.63 points, at 7,213.4.
Throughout the morning, the pound seemed to be nursing a hangover, dropping as low as $1.252 after leaping last week on Brexit hopes to hit a three-month high of $1.27.
The currency mounted a comeback in the early afternoon however, hitting its session peak of $1.265 as Labour leader Jeremy Corbyn castigated the Government in the Opposition’s response to the Queen’s Speech. It dipped again as Boris Johnson took to the despatch box, standing at $1.258 at the close of markets in London.
China Wants More
China wants more talks this month to hammer out the details of the “phase one” trade deal touted by Donald Trump before Xi Jinping agrees to sign it, according to people familiar with the matter. While Trump said the phase-one trade deal had essentially been reached, that wasn’t exactly the line rolled out by China. The Ministry of Commerce merely said “substantial progress” had been made, and the state-run Xinhua news agency didn’t mention a deal either. Investors will today be looking to China’s daily fixingof the yuan for a sign of goodwill toward the U.S. On Monday the People’s Bank of China fixed the yuan at almost exactly the same rate as it did on Friday. A stronger fix would have allayed concerns of currency manipulation in order to boost exports.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The bulls attempted to defend the 7200 level yesterday but it didn’t really pull away from it with much conviction. The S&P bounced just above the 2952 support level and has regained more ground, but a leg down towards the 2hour coral at 2950 still looks possible. As such that would probably take the FTSE down with it and we may well see a drop down tot he 7140 support level. Of course, Brexit talk and cable will continue to give a steer to it so keep watching both of those.
We have initial resistance at the 7225 level with the daily pivot and the 30min coral here, and if the bears appear here then a leg down to 7192 and S1 looks like it will happen first thing.
If the bulls were to break above the pivot then 7245 area is next resistance and we still have the 25mea and the coral on the daily around here. Above this then 7281 is the daily 200ema and as yet untested since we crossed below it so a rise to this area could well pan out, especially if cable drops off. However, I think we would then see a stutter at this area and probably a drop off so look for shorts here too.
For the moment 7200 remains as support, and there are a couple of other supports just below at the 7190 area. As such the bulls will probably try and defend this area. A break though and then as mentioned I can see us dropping down to 7140. The bulls will be keen to keep the markets supported though ahead of Brexit, if for no other reason than to not scare the population with doom and gloom stock market headlines in the run up to the 31st October exit date. The news flow has definitely got less negative than it was a week or so ago, when we dropped down to 7007 – I think they overdid it a bit and misjudged how jittery everything was so have toned it down.
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