FTSE 100 Outlook and Analysis for 25th October 2019
The pound briefly clattered to a one-week low on Thursday after Boris Johnson launched a third attempt to call a general election as he tries to break the Brexit deadlock. Sterling sank beneath the $1.28 threshold for the first time in seven days as reports broke that the PM was preparing to push for a vote on a new ballot as soon as Monday, but pared back some of its losses later on.
The call sets the stage for a crunch vote in a hostile House of Commons, where Mr Johnson has already twice seen his efforts to prompt an election thwarted. With a proposed ballot day of Dec 12, the election, if approved, would create weeks of further uncertainty – and could produce an outcome that radically shifts the Brexit process, which has been in the hands of the Conservative Party since the referendum in 2016.
The announcement of the vote plans arrived after the close of trading, so stocks were left unaffected. The FTSE 100 put in a standout performance among European stock markets, rising 0.93pc to 7,238.25, aided by a day-long weakness in the pound. The blue-chip index has now risen for four sessions in a row.
Not Amazing
As U.S. earnings season develops, Amazon.com is today’s fallen hero. The company reported its first quarterly profit decline in more than two years and missed analysts’ estimates, amid higher spending to speed up package delivery. Amazon projected operating income of $1.2 billion to $2.9 billion in the current quarter — but analysts’ estimates were $4.31 billion, and shares fell more than 7% in extended trading. Traders have been keeping a close watch on Amazon’s spending, as the company expands one-day delivery for its Prime program members and invests in its Amazon Web Services cloud-computing group. This year’s ramped-up outflows curbed investor enthusiasm, even after shares had neared records as recently as July.
Markets Mixed
Stocks in Asia headed for a mixed start Friday after U.S. equities edged higher, while Treasuries were steady and the dollar advanced. Equity futures in Japan and Hong Kong were flat, while Australian contracts advanced. Earlier, the S&P 500 Index traded above the 3,000 level, approaching its all-time high as technology shares led gains, but that positive sentiment is now being tested after Amazon’s earnings tumble. More broadly, the earnings season is giving investors numerous chances to see how corporations are withstanding the effects of trade tension, slowing global economic growth and Brexit. And on that note, the pound fell as Boris Johnson made a bid for a snap election. Elsewhere, crude rose 0.2% to $56.07 a barrel, and gold held at $1,503.97 an ounce.
December Gamble
Will it be the most wonderful time of the year for Boris Johnson? If he gets his December election, the U.K. prime minister would be taking a double gamble. Not only would he be holding it at a time of year when elections haven’t been held in modern times, but he would also be going in with the defining issue of his premiership unresolved. Johnson announced that a motion to trigger an early poll will be put to a vote on Monday; two-thirds of members of Parliament need to support the proposal for the election to take place. But the leader of the opposition Labour Party, Jeremy Corbyn, late Thursday said he wanted to see if the EU offered an extension before making a decision. “Take no-deal [Brexit] off the table and we will absolutely support an election,” he said. On a somewhat ominous side note, a December election would be the first since 1923 — which produced a hung parliament.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The turmoil in Westminster didn’t have too much effect on the futures prices yesterday after the close, and the bulls managed to hold the price above 7300 after than strong opening rise yesterday. The S&P also managed to defend the 3000 level despite a sharp drop from 3015.
For today I can see the bulls wanting to take this higher to test the cluster of resistance levels at the 7355 area where we have the top of the 10 day Raff channel, R1 and also a key fib line. If we do get a reaction there, then some profit taking looks likely ahead of the weekend, and a drop down to the 2 hour support level at 7300 is more than likely. We also have a strongly rising 2 hour 100 Hull MA currently at 7286 as I write this but that could easily be at 7300 by midday. Below that and as yet untested we have the coral line with support down at 7232 currently. If the pivot and 7300 level breaks then I am looking at a test of that level.
If the bulls were to break above the 7357 level then a test of the top of the 20 day Raff channel at 7404 is the next level to look for and this is just above R2 and the daily resistance at 7394. Being a Friday we may well see profit taking, either at the 7355 or 7400 areas if it were to get that high.
If the bears were to break below the 7300 level then prior to the 7232 we have the fib, 200ema and S1 at 7257 to 7265 so we may well see this area hold, and its worth keep an eye on this. If it does hold then a weekly close above 7300 looks likely.
With yesterday’s rise the daily chart has gone bullish again, after that drop to 7007, and the moving average support is now at 7235 also. So another support level showing at this area and a reason to expect it to hold.
So, bit of a mixed bag while all the Brexit stuff rumbles on. Watching that 7355 and 7400 levels are resistance; 7303, 7260, 7235 as support for today. Have a great weekend.
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