FTSE 100 Outlook and Analysis for 24th October 2019
- Markets mixed amid return to Brexit limbo and patchy US earnings data
- Sterling falls below $1.29 after MPs reject Brexit bill timetable, but is still near five-month high
Earnings Season
We’re well and truly in the midst of U.S. earnings season, with tech company reports stealing everyone’s attention. Microsoft posted a 14% jump in revenue that topped analysts’ projections, but Azure fell short: Sales rose 59%, compared with 64% in the previous period. EBay also missed expectations, suggesting last month’s departure of Chief Executive Officer Devin Wenig, who clashed with activist investors, could cloud the fourth quarter. PayPal, on the other hand, reported quarterly earnings that exceeded analysts’ estimates, sparking a surge in the stock — but the company acknowledged that EBay’s lost business will have an impact on next year’s performance. But perhaps the biggest surprise was Tesla: The electric-car maker surged in late trading after reining in expenses and posting its first profit in almost a year — a shock almost no one saw coming.
Markets Boost
Stocks in Asia looked primed for gains following an advance in U.S. equities, as earnings provided some optimism against a backdrop of concern for global economic growth. Equity futures in Japan, Hong Kong and Australia advanced, while the S&P 500 earlier added 0.3% and closed above the 3,000 level. While the picture isn’t uniformly positive, earnings season is dampening some fears that corporate outlooks are souring. About 80% of companies on the S&P 500 have topped expectations for profits, though Texas Instruments and Caterpillar both showed how uncertainty stemming from trade tensions and global economic weakness are making customers nervous. Treasuries yields rose off the lows of the session, while the dollar traded flat, and oil surged.
Brexit
The European Union left Boris Johnson hanging on Wednesday night as officials in Brussels debated whether to grant him a third extension to the Brexit process. EU ambassadors meeting in the Belgian capital agreed that they should accept the British prime minister’s request for more time, but couldn’t settle on how long he will get, according to officials familiar with the discussions. The French are pushing for a tight deadline of Nov. 15 while many other countries want to give the U.K. the three months it has asked for. Ambassadors resolved to reach a decision when they meet again Friday.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The bulls have built on the rise above 7200 and we are now testing the daily resistance area around 7260, however, the bears didn’t really appear here last night so I am thinking that we may well see a rise towards the cluster of resistance at the 7292 to 7300 area. Just below this though we also have the top of the 10 day Raff channel and the daily 200ema at 7280, so it will be worth keeping an eye on this whole area this morning to look for a reaction.
Should the bulls break above 7300 today then we may well see a rise towards the daily resistance at the 7350 level. I feel that cable will need to get more bearish though to start thinking about getting that high, but with all the Brexit wrangling you never know at the moment.
Initial support is at the daily pivot at 7240 this morning. If the bears were to break below this then 7210 to 7195 is the next level of note where we have the fib, S1 and 30min 200ema. Slightly below we also have the 2 hour coral at 7188.
So fairly simple plan for today, looking for a rise towards that 7300 area initially.
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