FTSE 100 live outlook prediction analysis for 25th February 2020
A vicious swing towards risk-off trading left equity markets bloodied and bruised, although a softening pound offered some relief to London’s international earners. The FTSE 100 plunged a hefty 3.3pc on its worst day since January 2018, while the FTSE 250 – despite being comparatively domestically focused – slumped just over 3pc.
Across the FTSE 350, only a small basket stocks were able to stay above water, as investors shifted into safer assets such as gold and bonds.
More than $1 trillion was wiped off global stock markets on Monday as panicked investors bet that the coronavirus outbreak will cause a devastating economic slowdown. European shares suffered their sharpest drop since directly after the Brexit vote. In the UK, the FTSE 100 plunged 3.3pc, its worst one-day fall for four and a half years.
Around £76bn was wiped off the value of companies across London’s main market. Paris, Frankfurt and Milan were all also mired deep in the red. Wall Street later joined the rout, with the Dow Jones plunging more than 1,000 points and closing down 3.5pc, suffering its worst day since early 2018. Oil dropped more than 5pc while the price of gold surged to a seven-year high as investors scrambled for safety.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The exodus from risk assets that saw global stocks surrender their gains for the year showed signs of letting up some on Tuesday, with U.S. and European futures advancing, the yuan rising and Treasuries edging down.
Japanese equities tumbled more than 3% as traders returned after a holiday, though the decline was less than the two-session slide on Wall Street while they were away. U.S. futures clawed back a fraction of their biggest daily drop since February 2018. Australian and Chinese shares were down more than 1%, while Korean ones rose and Hong Kong was little changed. Ten-year Treasury yields ticked up from near record lows and crude oil stabilized after a near-4% drop on Monday.
We have started to retrace a bit of yesterday’s declines already and the FTSE has found support at 7110 so far. 7070 is still looking like the key level below this though so should the bears try again, then this area looks like a target area for them. The bulls (or dead cat bouncers!) will try and bid this up towards the first resistance level in play which is at 7241. Above this I am looking at the 7370 area, and should we get that high then I am thinking that we will see a stutter here.
That was quite the drop yesterday, even more pronounced on the US markets as the virus fear continues, despite the WHO saying that its plateaued. Overnight we rallied up to the daily pivot at 7197 and dropped off a bit, and we are now testing that level again as I write this. We may see an initial drop off this down to the 7173 level then a bit more upside towards that 7241 level. I wouldn’t be surprised to see the S&P rally again at some point this week to close the gap at 3330 before a further slide though. If the S&P followed that pattern it sets up a decent head and shoulder as well for a slide down towards 3100 which would test the 200ema on the daily.
So, looking at a relief bounce today and possibly into tomorrow as we still have that 27 point dividend this week, and then a further slide. We may get as high at 7370 over the next 24 hours as well. Gold has dropped off pretty significantly from the 1684 resistance level as well, and as that front ran the drop in indices it may be doing the same in reverse now, lending weight to a relief rally on indices.
So, dead cat bounce today and looking at 7241, 7370 as the resistance levels, with 7130 and 7070 as the main support ones. S&P to rise to 3330 then drop off again to close the gap.
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No bounce today after all. S&P on support at 3130…. will it hold?