FTSE 100 live outlook prediction analysis for 22nd January 2021
The FTSE 100 and 250 both dipped slightly amid a pretty neutral mood on markets, which have struggled for direction in recent weeks. Enterprise software maker Sage Group was the top FTSE 100 riser, adding 28.2p to 601.20p, after saying its performance was “in line with expectations” during the first quarter of its fiscal year.
Sterling rose 0.7pc early yesterday to $1.3746 against the US dollar, touching the highest level since May 2018 in its biggest advance in over a week. It retained gains through the afternoon and remains above $1.37. The currency also hit an eight month high against the euro, of 88.30p. Helping boost gains was hopes that Britain’s vaccination rollout would lead to a quick economic rebound. The pound is up 1.2pc against the euro this year, and 0.7pc this week.
The Treasury’s furlough bill could grow by another £3bn per month if Rishi Sunak extends the job retention scheme, potentially taking the cost to almost £75bn by the summer.
Trade Fight
Australia’s trade fight with China cost it about $3 billion in commodities sales last year, and that relatively small impact suggests there’s little economic need for the country to bow to Beijing’s pressure. That’s the value of Australian exports lost in 2020 compared to the prior year, and covers commodities from copper and coal to wine and lobsters that are now subject to trade restrictions by Beijing, according to Chinese customs data. While the impact on some industries has been savage, China’s state-aided splurge on infrastructure to rescue its economy from the pandemic has lifted the amount of iron ore it needs to fuel record-breaking steel production. And there, Australia is the dominant producer. Purchases by China rose almost $10 billion last year.
Markets Consolidate
Asian stocks looked set to pull back from an all-time high Friday as investors assessed earnings expectations and the prospect economic growth will be bolstered by more U.S. fiscal spending. The dollar slipped. The S&P 500 Index eked out another record high Thursday as tech shares advanced. Benchmark Treasury yields remained higher after a small decline in initial jobless claims.[Bloomberg]
US & Asia Overnight from Bloomberg
Stocks dipped Friday from all-time highs as restrictions to curb escalating coronavirus infections dented some of the optimism around earnings and the prospect of additional stimulus. The dollar edged higher.
Equities in Hong Kong slid after a report that an area of the city would go into lockdown. Japanese stocks were modestly lower. S&P 500 and Nasdaq 100 futures slipped after U.S. shares eked out a record high Thursday as tech stocks advanced. European contracts pointed lower. Treasuries were steady.
President Joe Biden, who is pushing for nearly $2 trillion in additional fiscal spending, unveiled a national strategy to combat the coronavirus while warning the pandemic will worsen before it improves. In Hong Kong, local media reported officials will for the first time lock down tens of thousands of residents in a bid to contain a worsening outbreak.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The S&P failed to push above the 3685 resistance level again yesterday and has in fact dropped off a bit overnight. Was a nice bounce on gold as well but that has fizzled out overnight as the bearish sentiment has proliferated across the board. The S&P 2 hour chart has a green coral trend line support at 3818 so if we did slide the bulls would be looking to defend this for that final push up, though 3870 is the line to cross for a test of 3900ish and the top of the 10 day Raff channel.
For the FTSE 100, there is a cluster of resistance now at the 6730 area on the 30m chart, with the coral, pivot, 200ema and 2 hour Hull moving average – as such we could see any early bullishness tempered here and a slide down to the daily support at 6688, and just below S1. If the bulls were able to break above the 6737 level though then 6765 is the next level of note as we have the key fib and R1 here. Bit of a bearish session on the ASX200 today as well so adopting a “short the rallies” stance may well be the way to go. Cable continues to rise as well, weighing on the FTSE100 stocks.
As mentioned a few times I would quite like to see a dip play out over the next 6 weeks or so, and then the next climb to start end of Feb time for a steady rise for the rest of the year. Talk of UK lockdowns until into the summer period are being floated about and that could weigh on short term sentiment. As well as an extension to the furlough scheme till July. The bill climbs ever higher!
For the bears they will want to break the 6688 daily support level as that will likely drop us down to the S3 level around 6615. We also have the bottom of the 10 day Raff channel here, and also for the first test of the green daily coral – the first time it would have tested that since it changed green on 16th November 2020. As such, that level should be fairly key, whilst a break of that would be more bearish indeed!
Watching 6730 and 6763 as the main resistance levels for today, and 6690 and 6610 as the main supports. Good luck today and have a great weekend.
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