FTSE 100 live outlook prediction analysis for 1st September 2020
British stocks are lagging far behind all other major assets in the Covid recovery as Brexit jitters return to haunt London’s unloved market. UK equities and gilts were the worst performers of 20 top assets in the last three months, according to Barclays, unable to keep up with stocks elsewhere in the world as well as bonds and commodities.
Only oil has performed worse in 2020 with the FTSE 100 and 250 still down a respective 21pc and 19pc this year. By comparison, the S&P 500 US benchmark is up 8pc after a remarkable recovery. The Euro Stoxx 50 is down by a more modest 11pc.
Many FTSE 100 firms earn their money in dollars, so a stronger pound means profits are worth less when converted to sterling. The stimulus from central banks and governments has helped global stock markets rebound from their March nadir after Covid-19 fears rattled investors. The markets recovery has been led by soaring US stocks, with the S&P 500 up 56pc since its March low to a record high. The latest leg of the US rally was fuelled by the Federal Reserve hinting it will continue with ultra-low interest rates. The US central bank is switching to an average inflation target, meaning it will tolerate higher price rises before lifting rates. The S&P opened at a record high for a fifth straight day on Friday after Fed chairman Jay Powell’s speech the day before.
Markets Slide
Asian stocks looked set to pull back at the start of a new month after most U.S. stocks retreated, even though technology shares extended gains. Futures pointed to modest losses in Japan, Australia and Hong Kong. The S&P 500 Index edged lower, still notching a fifth consecutive monthly advance in August. The dollar weakened against its Group-of-10 peers, set for a fifth monthly decline in a row. Treasuries advanced, with 10-year yields slipping to just above 0.70%. The Dow Jones Industrial Average led losses after its components were revamped, with Microsoft and Walmart slumping on concern China could block a possible sale of the video app TikTok. Apple’s surge as the stock split 4-for-1 lifted the Nasdaq 100 past 12,000 for the first time. Elsewhere, oil fell back below $43 a barrel as a surge in coronavirus in the world’s major economies outweighed improvement in China’s economic activity. Silver rose, outperforming gold.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The dollar extended losses at the start of a new month to trade at its lowest since May 2018. Asian stocks drifted after a retreat in most U.S. equities with the exception of technology shares.
The euro led the charge against the beleaguered greenback and approached the closely watched $1.20 level. China’s yuan touched the highest since 2019 as manufacturing data indicated that exports are underpinning a recovery.
Australian shares underperformed, led by a decline in financials, while South Korean equities advanced as the government prepares to boost its budget in 2021. Equities fluctuated elsewhere in Asia. S&P 500 futures edged up after the benchmark notched a fifth consecutive monthly increase in August. European contracts rose. Treasuries were little changed. Indian bonds climbed in the wake of Reserve Bank of India steps to boost demand for government notes.
Start of another new month so we may well see a bit of an inflow of money this morning, and as such if we get an initial dip from the daily pivot, the buying may well start later on (around or slightly after 9am). We dropped yesterday on the futures, as the S&P stalled a bit near to the 3530 level. The 2 hour chart on the S&P has gone bearish now with 3525 as resistance and looking like a decent short area for the short term. If we do see some downside come in on that then it will likely drag the FTSE down with it towards the 5800/5750 level. The FTSE has certainly been lagging recently, for various reasons as mentioned above.
Overnight we have spiked down to S1 and the key fib level at 5906 and seen a bounce kick in there as the algo’s kicked in. As such, should we see that level again then a long here is worth a go, and it is just above the daily support at 5895. If this level holds then we should see a rise back towards the pivot at 5950, and also a retest of the high seen on Monday at 5986 – coinciding with R1 as well. Just above this we also have the 200ema at 5997, as well as round number resistance at 6000. With the 2 hour coral (red) now at 6001 and heading down, this area certainly looks to be decent resistance, though this would be the second test of the 2hr coral since it did change to red, so technically not as strong as the first test (the drop off 6060 last week).
Should the bears break below 5895 today then 5858 is the bottom of the 10 day Raff and the next main support level that I am looking at, with the 20 day channel just below that at 5837. Below these, then the 5750 level may well get tested this week, and is a level that we should see a bounce from. Its possible that we may well see the S&P drop and then the FTSE rise, as the daily RSI on the S&P is still at 78, while the FTSE is down at 35 – a possible rotation could therefore happen. The daily FTSE chart remains bearish though.
If the bulls break above the 6000 level then 6042 (Fridays level that we dropped off from) would be next up, and this is just above R2 (6031), then that 6060 level again, before a possible test of the top of the 10 day Raff at 6120. Not expecting us to get that high today though!
So, bit of a mixed bag, first day back after the long weekend but also start of the new month so should have a bit of strength, at least at some point. Watching the 5900 support level and 5990 resistance. Good luck today.
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″]