FTSE 100 live outlook prediction analysis for 25th September 2020
- Job Support Scheme will provide wage top-ups for employees on reduced hours
- Businesses offered extended loan repayment terms
- VAT cut for tourism and hospitality industries extended
- Markets largely unmoved by speech
Rishi Sunak has revealed a new batch of measures to support British businesses in the face of tightening restrictions and rising Covid-19 case numbers. The Chancellor unveiled new wage support measures ahead of the end of the widely used furlough scheme; extended loans to help businesses recover from the pandemic; and extended a VAT cut for the tourism and hospitality industries.
His announcements received a mixed reception: although business groups welcomed a chance of avoid a cliff edge once the furlough scheme ends, economists have warned the new job support scheme could encourage businesses to fire staff who are currently on reduced hours.
The FTSE closed down 1.3pc after traders were left largely unimpressed by the economic package. Economists at JP Morgan were among those to warn that the latest economic package was comparably “small”.
The S&P 500 rebounded on a report that Treasury Secretary Steven Mnuchin plans to resume negotiations with House Speaker Nancy Pelosi over a coronavirus aid package. He told a Senate Banking Committee hearing on Thursday that a targeted pandemic relief package is “still needed”, Bloomberg notes.
Tech companies and retailers led the advance in equities, following an early rout that took the index 10pc below its September high. The S&P was up 0.36pc, and Dow Jones was up 0.22pc. Shares were bolstered by a strong new homes report in the US. Sales of new homes in August rose by a very strong 4.8pc to a seasonally-adjusted annual rate of 1.01 million units, the US Department of Commerce reported. The jump followed a new home sales spike in July of 13.9pc.
Virus Trends
As the likelihood of additional federal stimulus fades, U.S. stock investors are returning their focus to the coronavirus pandemic and not liking what they see. High-frequency data that tracks economic activity shows a slowdown in the recovery from the height of the lockdowns, with Americans again cutting back on flights and going out to eat less often. Public-transit use also remains low, while jobless claims are stubbornly elevated. Meanwhile, the prospects for a vaccine in the next few months have also waned. That’s sending investors fleeing from risk assets, with stocks on pace for their fourth weekly decline.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Stocks in Asia rose Friday with U.S. and European equity futures as investors weighed the chances of a new American stimulus package against an uptick in global coronavirus cases.
Banks helped Australian equities outperform, while shares in India were also strong. S&P 500 contracts climbed after a volatile session on Thursday whipsawed by shifting views about the likelihood of fresh government aid. The U.S. gauge pared most of its advance as earlier optimism faded. Treasuries and the dollar were little changed. Crude oil advanced.
The bulls held on well yesterday and overnight the S&P has put in a bit of a move to the up side. As such the 3240 level is now 2 hour support and if that holds I am thinking that we will see a rise back towards the 3300 level, possibly the 3330 level that has been key recently, with the daily 25ema above that at 3348. If that comes to pass then we may well see the bulls bring the FTSE up as well. The ASX200 had a bullish session Friday and I am thinking that we may well do the same, albeit with a bit of a choppy session as Rishi’s scheme is digested.
Initial support today is at the daily pivot at 5848, and we also have a couple more key supports just below that at the 5842 level so I am thinking that should we get a dip down to this level first thing (and 5867 is initial resistance so would fit) then we may well see a bounce here. We have a green 30min coral here for support and thats the first bit of bull since late Wednesday on that trend indicator. As such, we may well see that hold.
Below 5840 then a retest of the 5801 level looks likely. Below that then the Raff channel cottons come into view again, with 5757 for the 20 day and 5685 for the 10 day.
For the bulls, above the 5900 level then they will be looking for a rise towards the 5940 R2 level and a possible retest of the 25ema on the daily at 5965, with the 10 day Raff above that at 5985.
Rishi’s latest jobs protection scheme could be argued to be more of a jobs reset and to get rid of a lot of the zombie jobs and zombie companies as the global reset of the social, economic and technological environment takes place. Covid has certainly expedited the changes that have been brewing in the past few years and it will be an interesting 24 months ahead as these changes manifest themselves. That maybe sounds a bit alarmist but I really wouldn’t be surprised to see major wholesale changes gaining traction globally.
On that jolly note, good luck for today, have a great weekend and watch 5840 and 5801 for support, 5890 for resistance. Remember being a Friday to be a little bit more cautious.
Recommended Broker
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership and Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below
[yikes-mailchimp form=”4″]