FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
European equity futures sank 3% and the euro fell Monday as the region’s worsening energy crisis added to concerns about a global economy already facing high inflation and a wave of monetary tightening.
An Asian equity index was also in the red, paced by losses in Hong Kong, where tech shares slid as traders weighed the risk of US curbs on investment. US contracts wavered after the worst week for world shares since June.
European stock futures slid on Monday while the euro took a fresh spill after Russia shut a major gas pipeline to Europe, leading some governments there to announce emergency measures to ease the pain of soaring energy prices. The euro lost 0.5% to a two-decade low of $0.9900 as markets priced in more risk of a European recession, while EUROSTOXX 50 futures shed 3.0% and FTSE futures 1.0%.
Germany announced plans to spend 65 billion euros ($64.7 billion) on shielding customers and businesses from rising costs, while Finland and Sweden offered liquidity guarantees to keep power companies open. read more
Oil prices jumped along with the whole energy complex as a holiday in U.S. markets made for thin trading conditions. News of more coronavirus lockdowns in China only added to the jittery mood, with blue chips down 0.6%.
Wall Street fared a bit better having already dropped late on Friday, with S&P 500 futures edging up 0.2% and Nasdaq futures 0.1%. The energy crisis is an added complication for the European Central Bank (ECB) as it meets this week to consider how much to raise interest rates.
Central banks in Canada and Australia are also expected to raise interest rates this week, while Federal Reserve Chair Jerome Powell and several other policy makers will make appearances and are likely to sound hawkish on inflation. While the August U.S. jobs report showed some welcome signs of cooling in the labour market, investors are still leaning toward a hike of 75 basis points from the Fed this month.
The two-year U.S. Treasury yield did fall almost 12 basis points on Friday and futures were trading flat on Monday amid general risk aversion.
British foreign minister Liz Truss said on Sunday she would set out immediate action in her first week in power to tackle rising energy bills and increase energy supplies if she is, as expected, appointed prime minister on Monday.
Bleak Winter
European ministers will discuss special measures to rein in soaring energy costs, from gas-price caps to a suspension of power derivatives trading, after Russia’s Gazprom again halted its key gas pipeline indefinitely. While politicians have been bracing for the prospect of supply cuts for weeks, energy rationing in Europe this winter is starting to look all but inevitable. With prices already at four times the level of a year ago, they’re now set to jump further, piling more pressure on industries and struggling households. The intensifying energy crunch may further depress the euro, which is at parity with the US dollar for the first time since 2002.
FTSE100 live outlook prediction analysis for 5th September 2022
Friday saw a swift drop off the upper resistance level at 7290 as Nordstream 1 was completely shut down by Russia, though the bulls have fought back a bit since the low of 7190 by the evening. The USA is closed today for a public holiday so we may well see a bit of a drifting day, though generally it looks like we may well get a bit of bullishness. The FTSE100 2h chart is bullish still, with 7150 Hull MA support for today, so should we get a drop down to this level then a long here is worth a go.
Initial resistance is at the daily pivot at the 7218 level with another test possible of the 30m 200ema above that at 7260. That is also just below the key fib at 7272 and then R1 at 7284. The bulls will certainly be keen to retrace some of Friday’s drop having worked hard to get it to 7290 prior to that news.
The bears meanwhile will be aiming for an initial drop down and the first key support is at the 7160 key fib level, and this is just above S1 at 7146. As those align with the 2h support mentioned above, we may well see any drop down to this area hold this morning, before a drift up towards the 7250 level.
A break of the S1 level though and then 7080 and potentially as low at 7035 as the next daily support is in the pipeline.
Todays news will be the Tory leadership result, with Liz widely expected to become PM. She will need to hit the ground running with her firefighting gear on as its a steady stream of bad news flowing in at the moment!
S&P500
Closed today for a public holiday but watch for 3915 as the main support – if this holds then we may well get a drift up back towards the 4000 level over the next few sessions.
Both the FTSE100 and S&P500 2h charts are bullish for the moment so buying the dip is the preferred play for the moment.
Good luck today.
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