31st May 2019
Global stocks rebounded after a sell-off in recent weeks despite rising trade tensions between the US and China. London’s blue-chip index rose 32.86 points to 7218.16, while EuroStoxx 500 was also up 20.34 points to 3318.15. However, the pound slipped to a five-month low against the dollar and fell to an intraday low of $1.2586 before eventually finishing the day flat at $1.2616.
President Donald Trump vowed to impose a 5% tariff on Mexican goods until that country stops immigrants from entering the U.S. illegally — brandishing a weapon used against a widening group of countries and jeopardising a new North American trade agreement.
The tariff would take effect on June 10, “until such time as illegal migrants coming through Mexico, and into our country, STOP,” Trump said in a Twitter post on Thursday night. He warned that the levy “would gradually increase until the illegal immigration problem is remedied at which time the tariff will be removed.” The tariffs could rise as high as 25% on Oct. 1, Trump said in a statement released by the White House.The move, which has major implications for American automakers and other companies with production south of the border and the U.S. economy as a whole, represents Trump’s latest expansion of his trade wars. It comes just days after he removed steel tariffs on Mexico that had caused retaliation against U.S. farm products.
It also marries two of his signature issues — trade and immigration — as he ramps up his campaign for re-election in 2020.
America’s ‘Economic Terrorism’
It’s your move, America. That was the message from China’s Ministry of Commerce spokesman, who said trade talks hinge on the U.S.’s “attitude and sincerity,” and that the country’s “various tricks” have escalated tensions. Another official accused the U.S. of “economic terrorism.” Threats from Trump and his unpredictability coupled with a slowing economy have left the Chinese looking for a way to “fight without severing relations,” and have left at least one of the country’s major companies rethinking U.S. deals.
Rate Cut Coming?
The U.S. economy is solid but the Fed is watching for signs of further slowdown, said Vice Chairman Richard Clarida, signaling a possible rate cut. U.S. GDP was revised down to an annualized 3.1%, consumer spending grew the slowest in a year, and initial jobless claims rose by 3,000. Asian equity futures are up after U.S. stocks meandered before closing slightly positive.
FTSE 100 Trading Signals, Forecast and Prediction
Last day of the month and a Friday so might be a bit all over the place today. May has been a bit of a funny month, with the levels not working as well as they usually do. Yesterday’s short got stopped, it didn’t reach the next resistance and then promptly declined as expected. With the Mexico tariffs thrown in last night we have seen a drop overnight back below the 7200 level, which has set the 30min chart up with coral and pivot resistance at 7213 to start with today. 7150 is the recent low and this area may well see a bit of a bounce, as a break of this will likely lead down to 7105.
Tariff tweets certainly have the ability to unsettle markets and they were already jittery ahead of that yesterday. The daily chart remains bearish and still showing the 7300 and 7373 resistance levels as once to watch, while the top of the 10 day Raff channel has dropped down to 7310 now. We dropped off the daily 200ema yesterday at 7230 and I think if we see a rise towards the 7213 area then a short here is worth a go. Above this then the next resistance levels to watch are that 7231 again, and then 7245 above that. Of course they are pretty close, so higher up we have 7274 though I am not feeling that we get that high today unless the US bulls really go for it later to prove a point that tariffs are good!
Generally today I am thinking that shorting the rallies is good, and if we break below 7150 then we should see a fairly quick drop down towards 7130 and 7100.
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