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A rebound in commodity and travel stocks drove UK shares higher yesterday, a day after the market hit a two-week low on concerns that surging cases of Omicron would spark fresh restrictions. The FTSE 100 index ended 1.4pc higher at 7,297.
Businesses have hit back at Rishi Sunak over fresh support measures to tackle the spread of omicron, saying the £1bn package doesn’t go far enough. The Government will provide one-off grants of up to £6,000 per premises for businesses in the hospitality and leisure sectors in England. Other measures include the reintroduction of the Statutory Sick Pay Rebate Scheme and further funding released through the Culture Recovery Fund.
A global rebound in stocks moderated in Asia on Wednesday amid uncertainty over the omicron virus strain’s economic impact and a foggy outlook for U.S. fiscal stimulus.
Equities in Japan and China were steady, while Hong Kong pared gains as a rally in technology shares eased. U.S. futures turned lower and European contracts made modest gains. The S&P 500 and the tech-heavy Nasdaq 100 jumped on Tuesday as risk appetite revived somewhat.
A dollar gauge advanced, while crude oil and Treasury yields were steady. A strong 20-year auction underscored ongoing demand for U.S. government bonds amid a savings glut and range of economic risks.
Thinner trading volumes heading into the Christmas holidays could exacerbate market swings, leaving strategists reluctant to read much into day-to-day gyrations during the period. Markets continue to be shadowed by escalating mobility curbs to fight omicron and a diminishing stimulus tailwind.
Military Ready
Vladimir Putin warned he’s ready to use his military to counter NATO’s expansion toward Russian borders, but said he hoped for a diplomatic solution to rising tensions as the U.S. said it was ready to discuss his security demands. The Russian president told the German chancellor that Moscow wants “legally enshrined” security guarantees that would bar any NATO advance eastward or the deployment of missiles in countries bordering Russia. The U.S. and Europe accuse Russia of a massive build-up of troops near Ukraine in preparation for a possible invasion as early as next month, something Russia denies. The U.S. and its allies are working on plans to impose painful new sanctions on Russia if it invades Ukraine.
More Infections
President Joe Biden said omicron will result in more infections among vaccinated Americans, but with few or no symptoms, while the unvaccinated potentially face a winter of severe illness and death. He said those who had had their shots should proceed with Christmas plans, as the U.S. revealed omicron had become the country’s dominant strain. In the U.K. Boris Johnson put a relatively normal Christmas at the top of his wish, ruling out stricter restrictions before the festivities end. Elsewhere Thailand halted its quarantine-free entry program, dealing a fresh blow to the tourism industry; Singapore found its first omicron cluster; and New Zealand pushed back its border reopening. Meanwhile, back in the States, the FDA is poised to authorize separate pills from Pfizer and Merck to treat higher-risk infected patients as soon as this week.
FTSE 100 live outlook prediction analysis for 22nd December 2021
The bulls have seized their moment and we could see a bit more bullishness play out over the remainder of this week now. The initial fears have been shaken off and as such we may well see a dip and rise play out today. A dip initially as we are at some key resistance to start with, namely the 4650 level on the S&P, and the 7315 level on the FTSE. A drop down to the key supports at 4598 and 7260 before another leg up would actually fit quite well today.
We have a very small 4.7 dividend today which will play a small part in helping the bulls later, and the main news event being GDP QoQ Q3 in the US at 13:30 – forecasted to be 2.1% versus 6.7% previously.
Above the 7315 resistance level the bulls will be aiming for the 7340 level where we have the key fib and just above R1, with daily resistance above this at 7372 – with R2 at this higher level as well (7368) then we could see the bulls later a bit here, and possibly a bit more consolidation kick in around this level. If the S&P bulls push on today and manage to get a climb going towards the 4700 level (10d Raff and R2) then that will help pull the FTSE100 up with it.
For the bears, they will be looking to drive this down from the 7315 level and need to break the 7250 area for any further downside. Omicron fears have subsided a bit though everyone has already started hunkering down of their own volition – the knock on effect of that for the hospitality and leisure industry isn’t ideal though, hence Rishi’s stimulus package.
Below the 7255 level then the key fib is next up at 7242 and then S2 at 7207 – though I am not thinking that we will get a 100 point slide today. The 2h chart remains bullish and the coral trend indictor has gone bullish now with 7230 support from that. 7258 is the Hull moving average support on the 2h also, and hasn’t been tested since we sprung off the 7100 level on Monday.
A rise towards the top off the 10 day Raff channel at 7389 does look possible though, and if we do get a dip and rise play out today then this area is certainly looking viable. We are not too far off the possibility of a 7500 year end either, though a lot will depend on whether the US can push on. I am sure the bulls there would like a break and hold above the 4700 level to see out the year, which may well help.
So looking like a dip and rise could fit on the S&P, Dax and the FTSE so watch for these key support levels and lets hope we get a bullish reaction off them.
Good luck today.
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