FTSE 100 live outlook prediction analysis for 28th September 2020
Some highlights from Friday:
- European stocks fall at close of worst week since June
- Buyout firm said to be exploring William Hill takeover
- UK borrowed £35.9bn in August – third highest amount ever
- Total borrowing since April at £173.7bn, £146.9bn more than in the same period last year
- Debt-to-GDP ratio is highest since 1961
- Tesco imposes limits to curb panic-buying
The scale of the financial challenge facing Rishi Sunak was underlined on Friday as the deficit hit a record £173.7bn in the first five months of the financial year. Economists fear the deficit could even top £400bn for the full year – almost 20pc of GDP – if the current trend continued. August borrowing alone hit £35.9bn – the third biggest month on record – while the UK’s debt pile climbed to £2.02trln – £249.5bn higher than a year earlier.
Market Open
Currencies began the week with muted moves and stocks in Asia were on course for modest gains as investors weighed further signs of recovery in China against more virus outbreaks in some parts of the world. The dollar was steady against most G-10 peers early Monday. S&P 500 futures started the week higher. The S&P 500 rose on Friday, when equity-index futures in Japan and Australia edged higher. Global equities are on course for the first month of losses since March amid mounting signs that the pace of economic recovery will slow with an uptick in global coronavirus cases and a stall in further government aid. Data over the weekend showed profits at China industrial companies grew for a fourth consecutive month in August.
On Edge
Emerging markets are heading toward the end of the third quarter with more reasons to be cautious than optimistic. Developing-nation stocks, currencies and bonds had their worst week in the five days through Friday since the coronavirus pandemic rocked global markets in March. The gap between implied volatility in emerging-market currencies and their G-7 peers is at the widest since June amid concerns over renewed lockdown measures and delays to further U.S. fiscal stimulus. Manufacturing reportsfrom China, India, Brazil and South Africa that are being published this week are potentially less decisive for investors than the global sentiment toward risky assets, and investors are bracing for higher price swings around the U.S. November elections.
Asia’s Deals Spree
After the Covid-19 pandemic pulled down the curtain on dealmaking in the first half of the year, an unexpected bright spot emerged in the third quarter: Asia. At $390 billion, deal activity in Asia Pacific in the third quarter is already at a record, according to data compiled by Bloomberg. The volume of deals involving Asian companies this year has climbed nearly 11% from a year earlier, while those in Europe and the Americas have plunged. Coronavirus remains a towering obstacle, and geopolitical tensions between the U.S. and China have made some transactions harder to execute, if not impossible. Still, dealmakers are hardly sitting idle.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Stocks in Asia gained Monday along with U.S. and European equity-index futures as China’s ongoing economic recovery countered some of the concerns sparked by rising global coronavirus cases.
The dollar edged lower and the yen ticked up. The Aussie rose after an influential economist walked back his call for an interest-rate cut to November from October. S&P 500 futures gained after the gauge advanced on Friday, while shares climbed in Seoul, Tokyo and Hong Kong. Crude oil slipped, while Treasuries were little changed.
Fridays dip and rise has carried through into Mondays session so far, with a decent rise in Asian markets. As such we may well see more of a continuation here for a Bull Monday (normal service resumes after last weeks Monday wobble!) and a rise towards the 5980 level looks like it will materialise today. The bulls will be keen to defend any drops and initially we have decent support at the 5840 level with the daily pivot and the 30min coral here (which has now gone green showing a bullish trend).
The daily chart however is still bearish, and the 25ema lines up with the top of the 10 day Raff channel at 5960. Whilst that wouldn’t be a first test of the 25ema since the cross over, the bulls will need to try hard to break above this. That then opens up a potential double top test with last Monday at 5980 and we may well see some bearishness here. The bulls of course will be keen to push above the 6000 level again, and should they do so then R3 and the daily coral both sit at the 6030 area. We may well see some bears appear here if we were to get that high.
For the bears, they will be looking to initially break below the 5900 level, to target that support level at 5840. I have put an order down at this level, however we are now above the 200ema at 5876 so may well see this level hold during today’s session so watch this for support. We have in fact already dropped down and tested it overnight and it saw a decent spring up towards the R1 level of 5916 overnight.
If the bears were to break below the 5840 level though, then a retest of the 5790 level looks likely. We have the key fib here at 5793 and it is also just below S1 which is 5803. I am not thinking that we will get that low though and am more inclined to see dips towards 5878 and 5840 being bought up.
For the SP bulls they will be keen to build on the recent rise to target the 25ema on the daily at 3349 to start with. 3380 is resistance above that. Looms like a buy the dip day on that to today.
Good luck today.
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