FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Stock and bond markets attempted to steady on Tuesday, as investors turned their focus to this week’s U.S. labour market report, to gauge if interest rate hikes that have been priced in around the world are justified.
An Asian stock gauge rose Tuesday as investor sentiment stabilized following a rout sparked by the Federal Reserve’s signal of a sustained period of restrictive monetary policy to quell inflation. The regional index added 0.5% as a climb in Japan helped to counter a retreat in Chinese tech shares. US and European futures were in the green, signaling a break in the equity slump that began Friday when Chair Jerome Powell stressed the Fed is willing to let the economy suffer to cool price pressures.
By mid-morning, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%, while Japan’s Nikkei stock index rose nearly 1%, in part helped by a fresh round of weakness in the Japanese yen.
Wall Street indexes fell on Monday, but the pace of selling was reduced and U.S. stock futures were steady in Asia.
Besides interest rates, the health of China’s economy is also at the forefront of investor concerns. China’s benchmark Shanghai Composite Index lost 0.4% in early trade.
Hong Kong’s Hang Seng index fell 1.8% as investors start to walk back their enthusiasm about an agreement struck between China and the United States for access to Chinese companies audit papers.
At the Jackson Hole conference last week, Federal Reserve Chair Jerome Powell and European Central Bank speakers struck a hawkish tone, driving selling of bonds and equities as traders jacked up near-term interest rate expectations.
Futures markets have odds of better than two-thirds that the ECB raises rates by 75 basis points in September, and see about a 70% chance that the Fed does likewise.
U.S. non-farm payrolls data is due on Friday, and markets may not like a strong number if it supports the basis for a continuation of aggressive interest rate hikes.
U.S. Treasuries settled down on Tuesday morning. The two-year yield fell to 3.4293%, after rising as high as 3.489% on Monday, its highest since late 2007.
Benchmark 10-year yields also fell to 3.0949%, down from 3.13% on Monday.
The U.S. dollar steadied after an overnight dip, though the euro was already struggling to hang on to small gains driven by ECB hike bets and a cooling of gas prices.
Bleak Outlook
China optimism at American companies has fallen to a record low, with President Xi Jinping’s Covid Zero policy causing more than half of companies to delay or cancel investment, a survey from a US business group shows. Pandemic-related shutdowns pose an even bigger headache to US companies in China than worsening relations between Beijing and Washington, according to the survey, published as lockdown restrictions around Beijing intensified ahead of a key meeting of the Communist Party’s top leaders. Economists this week further downgraded forecasts for China’s economic growth in 2022.
FTSE100 live outlook prediction analysis for 30th August 2022
Hope you had a good long weekend. The bulls fought back a bit yesterday to get the FTSE100 back above 7400 after a weak start to Monday. For today that well manifest into a bit more upside towards the resistance cluster at 7440, where we have the key fib and the 200ema on the 30min. There is also the 2h coral here, though not the first test of that red line so a bit weaker in theory.
R2 for today is also at 7452 so should we get some early upside towards this area we may well see a stutter here.
It does look like we may well get a dip at some point today though and I am looking at the 7387 area as decent support as we have the daily pivot and the green 30m coral here. The bulls will certainly be keen to try and defend the 7400 level I would expect having managed to recapture it yesterday.
If the bears were to break below the 7385 level though then a slide down to the 7341 key fib, and lining up with yesterdays low would probably play out, and I would hope for a bounce around this area.
Above the 7440 level and the bulls will be aiming for the 7490 R3 level, though that sort of feels a big ask for today. The daily EMAs have dropped off a bit with the recent down side, so the bulls certainly have their work cut out at the moment to get some more upside going, though the daily coral remains green for the moment, but the 10d Raff is heading down more steeply now.
S&P500
The bulls will be aiming to hang onto 4000 and we have the green 30m coral and S1 both at 4011 so we may well see this hold. A break of 4000 though doesn’t bode well for the short term, though we do head towards NFP on Friday. Markets may not like a strong number if it supports the basis for a continuation of aggressive interest rate hikes. Initial resistance is at 4058 to start with today and we may well see the bears have a go here if we get an early rise, as that ties in with R1 and the decline Hull moving average (its currently at 4075 but dropping down quite steeply). I would expect to see a reaction on the first test of this line. 4112 is the red 2h coral, but I don’t expect it to get that high today.
Good luck today, sometimes pays to let the dust settle first thing after a bank holiday weekend and see which way the wind is blowing on the markets.
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