FTSE 100 outlook prediction analysis for 2nd December 2019
On Friday, the FTSE 100 fell for a second session in a row, with major investors positioning themselves for a potentially tumultuous December. These were some of the day’s biggest stories:
- The Pound looks set to finish November up against the euro, marking the fourth successive month of gains.
- Npower is preparing to cut a swathe of UK jobs as part of restructuring plans
- The Daily Mail’s owner announced it would purchase the i paper for £49.6m
- Daimler says it will cut at least 10,000 jobs as it undertakes a painful transition to electric and self-driving cars
- Ocado is aiming to go big in Japan after striking a digital deal with supermarket giant Aeon
- UK consumer confidence is smouldering at a six-year low as Brexit weighs on sentiment
Market Open
Stocks in Asia were set for a muted start to December as investors weighed data on China’s economy that showed a bright spot for manufacturing and the latest news on the trade front. The Australian dollar rose. Futures pointed marginally higher in Tokyo and Hong Kong. The S&P 500 Index dipped on Friday. Oil was in focus after Iraq said OPEC and its allies will consider deeper production cuts. On the data docket this week, China’s Caixin PMI manufacturing is out on Monday, and Friday brings the U.S. jobs report, where estimates are for nonfarm payrolls to rise by 190,000 in November.
Ready to Act
China’s monetary policy should remain prudent with room for adjustment as a prolonged downturn in the global economy is likely, central bank Governor Yi Gang said. The People’s Bank of China should be prepared for a “mid- and long-distance race” and stick to conventional policy as long as possible, Yi wrote in an article published Sunday on the WeChat account of Qiushi, the Communist Party’s flagship magazine. Yi’s comments come ahead of a high level economic meeting expected this month where top leaders and senior officials will lay out growth targets for 2020.
And finally, this will end in tears…..
Debt Binge
Zombie companies in China. Crippling student bills in America. Sky-high mortgages in Australia. Another default scare in Argentina. A decade of easy money has left the world with a record $250 trillion of government, corporate and household debt. That’s almost three times global economic output and equates to about $32,500 for every man, woman and child on earth. Much of that legacy stems from policy makers’ deliberate efforts to use borrowing to keep the global economy afloat in the wake of the financial crisis. Now, as policy makers grapple with the slowest growth since that era, a suite of options on how to revive their economies share a common denominator: yet more debt.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Start of the new month and the final bit of the year so we should see some new month money flow in, as we start to turn our attention to the Santa Rally this month (maybe!) and after Fridays profit taking drop, we may well see a bit of a rise initially. Of course we are also now into General Election month, polls which are usually wrong show a diminishing majority for the Tories so all to play for still. The S&P bears cannot get a handle on it and it remains at the 3150 level though there is now 2 hour resistance at the 3156 level that the bulls need to break. NFP on Friday is forecasted to be positive but any wobble might be seized upon by the bears.
The FTSE 100 futures have bounced back from that 7336 level on Friday, just missing a test of the 25ema at 7330 on Friday. The bulls still need to break above the 2 hour resistance levels which are at 7415 and 7424 to start with today. I am thinking that we may well see a rise and dip play out today, with more bullishness this morning to take us up to that level.
If the bulls were to break above the 7425 level today then we remain on that path towards the top of the 20 day Raff channel at just under 7500, though we may well see a stutter at the 7453 level where we have R2 and daily resistance at 7466. The daily chart remains bullish and we haven’t had a perfect test of the 25ema as yet (just missed Friday) so a dip and rise scenario does fit fairly well.
The flip side of that is if the bears were to break below the 7325 level as that then means 7294 (200ema daily) is likely to be tested. Below that then the daily coral sits at 7275 for the moment, and with the 10 day Raff channel bottom here it would in theory be decent support to spring board a Santa Rally.
So fairly simple plan for today looking at a rise and dip to play out with the pivot to hold initially. I do think we will see a reaction at the 7420 area though should we get that high today.
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