FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 closed down sharply on Friday, and was likely saved from an even more devastating drop by a rapidly falling pound. It ended at 7,521, 1.4pc lower.
Several miners have reported weaker-than-expected results this week, and earnings are being hit by increased costs. But London was at the mercy of global headwinds as its banks, including HSBC and Barclays were caught up in a sell-off caused by comments from the US Federal Reserve.
Stocks, U.S. futures and commodities sank with Treasury yields Monday as China’s worsening Covid situation amplified concerns about a slowdown in demand in the world’s second-largest economy.
MSCI Inc.’s Asia-Pacific gauge fell for the sixth session in seven with sharp declines in Hong Kong and China. S&P 500 and Nasdaq 100 futures contracts dropped in a sign of further weakness to come. European futures fell.
Treasuries paused the rout of the past week that roiled markets and the dollar extended an advance as investors opted for safe havens. Crude fell below $100 a barrel and iron ore slumped in Singapore. Palm oil jumped after Indonesia, the world’s largest exporter of the commodity, halted exports of cooking oil and its raw materials amid a local shortage.
China locked down some areas of Beijing and ordered mandatory Covid testing in a district as policy makers raced to prevent a repeat of the outbreak that’s hobbled Shanghai. The yuan fell to the lowest since April 2021 and led declines in emerging-market currencies.
Fears a wider lockdown in the Chinese capital amid the government’s steadfast adherence to its Covid-zero policy is spooking investors. They are worried about disruptions to the global supply chain and a deteriorating economic outlook from the Shanghai restrictions as well as disappointment at policies to shore up growth and stabilize markets.
The outlook for inflation continues to overhang the markets. Federal Reserve Chair Jerome Powell endorsed a 50 basis-point increase next month and at least one more such move, outlining his most bold approach yet to reining in surging prices. Stronger tightening signals from the European Central Bank are also undermining risk appetite.
Second Term
Emmanuel Macron defeated far-right leader Marine Le Pen in the French presidential election on a pro-business, pro-European Union platform, bolstering the bloc in the midst of its worst security crisis in decades. Projections by France’s five main pollsters put Macron on course to win about 58% of the vote, compared with 42% for Le Pen. The outcome is good news for investors who had predicted that a Le Pen victory would deliver a shock to markets on the scale of the U.K.’s Brexit vote or the election of Donald Trump in the U.S.
Sharp Rise
Shanghai reported its highest number of daily Covid-19 deaths in the current outbreak, as the city’s strict lockdown measures entered their fourth week. The city recorded 39 fatalities for Saturday, up sharply from 12 the previous day. Meanwhile, more Covid clusters were found in Beijingat the weekend, with the city’s Communist Party chief describing the situation as “urgent and serious.”
FTSE 100 live outlook prediction analysis for 25th April 2022
Well that’s quite the bearish start to Monday, despite the Macron victory in the French elections that markets were supposed to be in favour of. Covid cases/increases/fears in China are being blamed initially for the sell off this morning, but it’s probably more of a mixture of everything. Sanctions against Russia are hurting the West just as much, with Germany being worse affected. A forecasted cold snap in May in the UK will see a spike in demand for gas (and electricity). Hopefully the sanctions aren’t cutting the West’s nose off to spite their face. We also have the FOMC meeting next week looming in on the radar. The S&P500 is looking particularly weak now with both the Raff channels heading downwards, and the 10d FTSE100 Raff channel also heading down for the first time in a while.
To start with though we are on the daily support level at 7436 and S1 at 7432. 7440 is also the daily coral and the first test of this since it went green on 7th April. The bulls need to be quick out the blocks today to get a rise towards the pivot at the very least at the 7521 level.
7483 is also a back test of the key fib so we could see any rise stutter here this morning to drop back down to this 7430 area.
Should the bulls break above the pivot at 7521 then 7564 is the 200ema on the 30min chart and could get seen, though as I write this that looks a big ask! I am not expecting it to get this high today.
The bears will be looking to break below the 7430 though as that opens up the potential for a slide down to the 7200 area, with 7293 first up as we have the 200ema on the daily chart here. 7293 is also the S3 level for today, and should it slide there then we could see a bounce – worth a tentative long here. First up though is 7385 for S2 and the lower of the fib levels that may see a reaction. Going to be a tricky open!
The shorting the rallies stance last week was certainly the right move, though that cheeky little move to 7610 on Friday looks like a stop hunt.
S&P500 and Dax40
S&P500 looks a mess for the bulls with yearly lows beckoning below this 4250 level. Any rise is likely to be shorted, and the 2h resistance levels at the 4400 and 4430 levels would be good areas to get short on any rallies. Likewise the Dax, any rallies to the 14330 area would test the 2h resistance levels and worth shorting here. That said, a climb to these today maybe a big ask for the bulls and the daily pivots at 4302 and 1432 looks more achievable. Again, it all depends on the bulls being quick out the blocks.
Trade cautiously this week as it still feels volatile. We should start to see the volume kick up a bit this week too which may well help to stabilise the whipsaws that we had last week. Good luck today.
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