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German inflation has returned to its highest level in almost 50 years after a temporary relief offered by tax cuts and cheap train tickets wore off. Inflation in Europe’s biggest economy hit 7.9pc in August – its highest since the winter of 1973-4, when prices were stoked by an oil crisis. This figure was first reached in May, before slipping back to 7.5pc by July.
Oil prices have dropped sharply as markets were again gripped by fears about a global economic slowdown. Benchmark Brent crude tumbled 5pc to below $100 a barrel, while West Texas Intermediate was trading around $92. Stock markets also fell into negative territory in afternoon trading Tuesday, extending losses from last week after the Federal Reserve hinted more interest rate rises were on the way.
US equity futures rose and an Asian stock gauge erased an intraday drop Wednesday in a hiatus from the selloff triggered by the Federal Reserve’s preference for restrictive monetary settings to tackle inflation.
The regional index was steady in a mixed day that saw tech shares climb but China’s bourses retreat. BYD Co. plunged in Hong Kong after Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in the electric vehicle maker.
Traders were also evaluating the latest Chinese data, which indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll.
S&P 500, Nasdaq 100 and European contracts pushed higher. Wall Street shares on Tuesday hit a one-month low — robust US labor demand and consumer confidence data added to the case for sharp interest-rate hikes to tackle inflation. Fed officials reiterated their determination to curb price pressures.
The overnight JOLTS report on job openings – closely watched by the Federal Reserve – pointed to extremely tight labour conditions, defying the Fed’s tightening efforts so far and bolstering the case to do more. To discourage speculation about rate reductions next year, New York Fed President John Williams said on Tuesday that the central bank likely needed to get the policy rate above 3.5%, and was unlikely to cut rates at all in 2023.
U.S. equity futures though pointed to some respite, with S&P 500 e-minis indicating a 0.3% rebound from the index’s 1.1% slide on Tuesday. Investors will now be even more attentive to the monthly U.S. jobs report on Friday.
Third Term
The Chinese Communist Party’s twice-a-decade leadership congress will begin on Oct. 16, state media said, bringing President Xi Jinping a step closer to a precedent-defying third term in power. The party will conduct an in-depth analysis of the international and domestic situation, review the past five years and push forward with common prosperity, according to the report, referencing Xi’s drive to narrow the nation’s wealth gap. The week-long pageant will also be scrutinized for signs Xi plans to ease the Covid Zero policy that has kept deaths low but triggered economic hardship.
FTSE100 live outlook prediction analysis for 31st August 2022
Well that was certainly a pump and dump on the FTSE yesterday (and everything else in fact) with it reaching the 7490 resistance level before dropping off hard to test the daily supports at the 7330 level. That has held so far for a decent overnight bounce, and should we see that level again then I would like to see it hold again. Thats the green daily coral there and the first test of it since it changed to bullish. Aligning with that today we also have the 200ema on the daily at 7340.
Despite the doom and gloom media it looks like we may well see a climb today and the bulls will certainly be aiming to recapture the 7400 level. Likewise the S&P bulls will want to hold above 4000 after yesterday’s brief foray below. They will need to break above the 4021 level initially as we have the 2h Hull MA there, and should they manage that then 4050 is a decent upside target.
If we get an initial dip not he FTSE100 then that 7330 area should hold. Below that then the bears will have more of a free reign and will be aiming for th e7285 S1 to start with, but probably the 7250 area where we have the bottom of the 10d Raff. That said, I am more inclined to go with the bulls today.
Above the 7440 level (and this does look quite key to start with as we have the key fib, 200ema, and R1 all around here) then the bulls will be aiming to break above yesterdays high, and target the 7490 level again. R2 is right up at 7546 but that feels a bit of a big ask for today. Mindful of NFP on Friday as well, and yesterdays jobs data lent weight to further rate rises sooner rather than later.
Interesting scenes in Manchester with the “enoughenough” ground swell gaining support yesterday too. A winter of discontent brewing (?) as the gap between the haves and have nots continues to widen creating a strong undercurrent of ill feeling around the country as the cost of living squeeze worsens.
Keeping an eye on the S&P500 today to see if the bulls can push on and keep it above the 4000 level. 4021 initially, then 4040 as the key fib and then R1 at the 4051 level, and also coming into the 30m 200ema at 4070 above that. Ball is in the bulls court today really to defend any drops.
Good luck today, watch for 7330, 7285 7226 support, 7440 resistance.
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