FTSE 100 live outlook prediction analysis for 8th September 2020
The FTSE 100 was Europe’s top-performing index yesterday, falling mildly as its continental peers suffered chunky losses. The index was supported by a second day of losses for the pound, as the Government’s Brexit sabre-rattling put investors on edge.
Wall Street’s sell-off returned with a vengeance after Monday’s market holiday, with the tech-heavy Nasdaq opening 3pc lower in a third volatile session. The sell-off began last Thursday, although what initially looked set to be a running rout was stopped short by a recovery during Friday’s session. Nerves were back in force on Tuesday however, as markets reopened following the US’s Labor Day national holiday.
Apple shares fell 4pc as the group retraced its steps after attaining a $2 trillion market cap last month. Fellow tech giants Amazon, Facebook, Google and Microsoft all also posted losses. Tesla, a firm favourite among retail investors, dropped as much as 20pc as tech stocks faced a shake-out – although its shares are more than triple their start-of-year price.
European markets posted losses as the global mood sour, although a continued fall in the pound driven by Britain’s latest Brexit imbroglio gave the FTSE 100 some support, with the index closing down 0.12pc. The pan-continental benchmark Stoxx 600 dropped 1.8pc.
Stock Rout
U.S. stocks sank for a third day, with the selloff in technology shares picking up steam as investors fled the high flyers that fueled a historic five-month rally. Oil plunged, while Treasuries rose with the dollar. U.S. futures opened lower in Asia, indicating more pain is in store. Equity index futures in Asia pointed lower. Volatility roiled financial markets, sending the Nasdaq 100 down 4.8% and leaving it 11% off its record set last Wednesday. Tesla suffered the worst rout in its history and is now down 34% in September. Investors have been spooked by the last leg of a rally that drove valuations to levels last seen in the dot-com era. Few pockets of the market were spared, with 450 S&P 500 members lower and only five Nasdaq 100 components higher. The broader index hit the lowest since Aug. 11. West Texas Intermediate crude plunged almost 8% in New York.
Vaccine Glitch
AstraZeneca’s U.S.-traded shares declined sharply Tuesday following a report that a study of the British drugmaker’s Covid-19 vaccine had been put on hold. In late trading in New York, shares of AstraZeneca fell as much as 8.3% after STAT reported that the company had paused its coronavirus vaccine trial due to a suspected adverse reaction in a trial participant in the U.K. The nature of the hold wasn’t clear and it’s possible it could be minor, according to the report. AstraZeneca’s vaccine, which it is developing with researchers from the University of Oxford, has been viewed as one of the leading candidates to reach the market. It comes as frontrunners in the race for a Covid-19 vaccine pledged to avoid shortcuts on science as they face pressure to rush a shot to market. Meanwhile, France’s health minister called a surge in infections in the country “worrisome,” and U.K. Prime Minister Boris Johnson banned social gatherings of more than six people in England.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Asian stocks fell and European equity futures fluctuated amid worries that a Covid-19 vaccine could be delayed and concerns about equity valuations. The dollar and Treasuries extended gains.
Shares retreated across the region, though losses were shallower than the slide in U.S. equities overnight. AstraZeneca Plc’s decision to pause a vaccine trial weighed on sentiment. S&P 500 futures and Nasdaq 100 contracts turned higher after earlier declines.
Overnight we dropped down to test the 5850 2hr coral support line and have had a small bounce from there, along with the S&P futures testing the 3295 support area. Last chance for the bulls to launch a defence there, for more upside from there, otherwise the bears are really going to take control on a break of that 3290. We have the bottom of the Raff channels on the S&P there as well. The US markets needed the pullback of course as they were really getting ahead of themselves, and also need to go for a few stops on those longs, as well as some profit taking. Tech leading the way again, with most declining instead. Has it squeezed enough bulls now?
The FTSE really lagged the US rally over the summer, however the downside has also been a bit limited, so far at least, helped by the dollar of course. For today we have initial support at the 5900 level now that the futures have brought it back up, but that overnight low below that at 5850. 5854 is also the key fib level for today so if we do dip to there I would like to see that hold for a further push up. Should the bears break 5850 then the slide towards the 5720 level is still in play, along with a possible test of 5600.
For the bulls, if they can break 5958 where we have initial resistance from the R1 and 10 day Raff channel then they will be looking for a rise towards 6000 again. Failed just shy yesterday unfortunately. Above the 6000 level then R2 at 6040 would be the next area of note. The top of the 20 day Raff channel though is just below 6000, and we would also have another test of the 25ema at that level so its a big hurdle for the bulls to jump at the moment.
If the US has flushed out enough bulls now then we may well see the worm start to turn shortly. It’s a fairly positive sign that the 3300 area held initially anyway. They now need to break above the 2 hour resistance at 3368, then 3425.
So for the FTSE today I am looking at 5900 and 5850 as the main supports, then 5958 and 6000 as the main resistance levels. Possibly a bit of a pause in the aggressive selling in the US, though the RSI on the daily chart still has a bit further to slide (its at 40 still) so we we may not be completely done just yet. Good luck today.
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