FTSE 100 live outlook prediction analysis for 3rd August 2020
The FTSE 100 stumbled into the weekend with a further fall on Friday. These were some of the day’s top stories:
- The eurozone economy shrank 12.1pc in the second quarter in the worst fall on record. It followed record GDP slumps in France, Spain and Italy.
- European stocks markets fell on fears of a second wave, with the UK government pushing back plans to reopen leisure facilities just a day before restrictions had been set to lift. The FTSE 100 dropped 1.54pc to 5,897.76 as the Government pushed back plans.
Mid-caps dropped only slightly, with the FTSE 250 closing down 0.50pc at 16,932.65. The US stock market is at its most overvalued ever on some closely watched measures as Wall Street continues to rise despite the global downturn. The average S&P 500 stock is trading at record high valuations factoring in profits, surpassing levels seen during the dotcom bubble on some measures, according to Bank of America. The S&P 500 has recovered all of its 2020 losses despite US GDP plunging 33pc on an annualised basis in the second quarter.
Economic Hit
The government in the Australian state of Victoria on Sunday declared a state of disaster after the coronavirus outbreak showed no signs of abating three weeks after Melbourne’s 5 million residents were ordered to stay home except for work, medical care, provisions or exercise. The lockdown will now cover all of Australia’s second-most populous state, and residents of the city will be under curfew between 8 p.m. and 5 a.m. The new restrictions will be in force for six weeks, and Australia’s Treasurer Josh Frydenberg said the nation’s economy faces another significant hit. In Asia, the Philippines is reimposing a lockdown in Manila and Indian Home Minister Amit Shah said he tested positive for the virus. In the U.S., cases in California increased by more than the 14-day average and New Jersey’s transmission rate rose further.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Asian stocks started August in a mixed fashion amid a resurgence in Covid-19 cases and simmering U.S.-China tension. Treasuries slipped. Shares advanced in Japan and China but declined in Hong Kong. Australia’s and South Korea’s stocks fluctuated, as did S&P 500 contracts. Oil dipped. Gold continues to trade near record highs. On Friday, U.S. stocks extended their July rally, aided by a surge in technology shares. American lawmakers are continuing talks over a virus-relief package. Infections are picking up again in some U.S. states. A senior Federal Reserve official on Sunday urged Congress to act to support those laid off due to the pandemic and suggested a fresh lockdown. In Australia, Victoria state tightened restrictions as cases jumped, while the Philippines imposed a stricter lockdown for Manila and nearby areas. Stocks in Manila had the biggest drop in Asia, down more than 3%.
Its the start of the new week and the new month so we may well see an initial kick up this morning as the new month money flows in, though we have initial resistance from the daily pivot at 5942. We bounced on Friday off the daily support at 5858 and the bulls smudged to recapture the 5900 level, as such, if we dip below that initially this morning, towards Fridays close at 5897, and a possible overshoot to the fib support level at 5879, we may well see another bounce from here. I am thinking that we will see a bit of a bull Monday then another slide start either tomorrow or Wednesday.
The daily chart has the 25ema resistance at the 6137 level still, and we haven’t tested that line yet since that timeframe went bearish, so if we were to get up to this moving average at some point (and R2 is at 6148 for today but not expecting us to add that many points) then a swing short looks worth trying there. The 2 hour chart has resistance at 5985 for today and that looks to be a more realistic upside level for this morning. As such, a short here is worth a go.
If the bears break below the 5880 initially, then Friday’s low at 5858 is next up. If they break this then the slide may well start to gather pace, down towards the 5700/5650 area in the fullness of time. That said, we have S1 at 5826 which may put up a bit of a defence. There are a few warning signs flashing about how high the US markets have got on this leg up, but the fed remain committed to underpinning the markets still, so the S&P may well manage that 3310 level yet.
For the bulls, if they break above the 5980 level then as mentioned, 6055 is the next level of note. 6121 is the top of the 10 day Raff channel above that but I don’t think we will get that high today.
Cautiously bullish, at least initially, today watching the 5980ish and 6055 levels for bearish reactions. Support 5880, 5858 and then 5820. Good luck today.
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