FTSE 100 live outlook prediction analysis for 4th September 2020
Wall Street tumbled on Thursday, with hundreds of billions of dollars wiped off the value of America’s booming tech sector amid worries of a Nineties-style bubble. The tech-heavy Nasdaq dropped nearly 5pc as heavyweights such as Apple, Amazon, Microsoft and Facebook lost ground. The index has notched up a string of record highs in recent weeks.
The FTSE 100 finished 1.52pc lower today to 5,850.86, its lowest close since mid-May, while the FTSE 250 dipped 1.38pc to 17,459.69.
European equity markets were enjoying a rally earlier in the session on the back of hopes regarding a Covid-19 vaccine, but the painful move lower in the US has weighed on indices on this side of the Atlantic.
- US equities tumbled by the most in almost three months as the rotation away from high-flying tech stocks gained steam, with investors questioning the sustainability of lofty valuations.
- The S&P 500 Index retreated from a record high and was set for its biggest drop since June amid declines in Apple, Microsoft, Amazon and Facebook.
- The Nasdaq 100 fell more than 5pc at one point, its biggest intraday decline since March.
- European stocks erased gains and finished more than 1pc lower.
- The euro slumped for a third day on signals the European Central Bank is concerned about its strength. Treasury yields dipped and the dollar rose.
- Global equities are pulling back hard from unprecedented highs as investors question the justification for steep valuations as the pandemic rages on.
- While data Thursday showed applications for jobless claims fell last week, US investors may need evidence of a fuller economic recovery after a 60pc run-up in the S&P 500 since its March lows.
No Backing Down
President Xi Jinping said nothing will come between the Chinese people and the Communist Party, setting a combative tone at a difficult moment in U.S.-China relations. Speaking at an event marking the anniversary of China’s victory over Japan in the Second World War, Xi outlined areas where China will “never” accept foreign interference. He took aim in particular at threats to the Chinese Communist Party’s continued one-party rule. “The Chinese people will never allow any individual or any force to separate the CCP and Chinese people, and to pitch them against each other,” Xi said. “The Chinese people will never allow any individual or any force to distort the CCP’s history, and to vilify the CCP’s character and purpose.” Xi didn’t specifically mention the U.S., but his comments are likely to be interpreted as a message about the relationship.
Markets Slide
Asian stocks looked set to end the week with declines after U.S. equities tumbled by the most in almost three months, with the rotation away from high-flying tech stocks gaining steam as investors questioned the sustainability of lofty valuations. Futures in Japan, Hong Kong and Australia retreated, though signaling smaller losses than the 3.5% slide in the S&P 500 Index. The Nasdaq Composite sank 5%, its largest decline since June. Treasury yields dipped and the dollar edged higher, with moves into haven assets muted despite the pronounced drop in equities. Elsewhere, oil declined. The Cboe Volatility Index, often described as Wall Street’s “fear gauge,” rose to the highest level since June. Bitcoin fell as much as 7.6%.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Stocks in Asia fell Friday along with U.S. equity futures as a rotation away from high-flying tech stocks gained steam amid question marks over the sustainability of lofty valuations.
Losses in Tokyo, Shanghai and Hong Kong were smaller than those seen in the U.S. overnight, as trader focus turned to the non-farm payrolls report later Friday. S&P 500 futures slipped after the benchmark fell 3.5% Thursday. Nasdaq contracts slid over 1% after the tech-heavy gauge’s 5% overnight slump, its largest since March. That suggests the U.S. retreat could extend for a second day ahead of a holiday weekend there. Treasuries and the dollar were steady, with moves into haven assets muted despite the pronounced drop in equities. Gold ticked higher.
Earlier in the day it looked like the SPX was going to manage to test that 3600 level as well, but instead it dropped off 3590 instead. The US markets have certainly got ahead of themselves recently, and the volatility index had started to rise a few days ago as we had noted. The problem is that trying to short a run away train can often leave you with a bloody nose! Anyway, its dropped down and now we need to be prepared for this to be a possible bear trap and it goes back up, now squeezing the shorter, of if the drop will go down to more sensible (i.e. not overbought) levels. The S&P has defended the bottom of its Raff channels overnight, and the FTSE bounced off the 5760 support area we have had pencilled in for a while.
Initially we may well see the FTSE try and climb towards the pivot and 30min coral resistance at 5860, though we also have the 25ema not he 30min to start with at 5830. The bulls will need to break this initially. Above the pivot level then a recovery to 5900 looks possible, where we have the key fib level for today and also near the 200ema at 5920 (and dropping). 5875 is however decent looking 2 hour resistance, so if we get a bit of a retrace of the fall then we could then see a further slide. I am watching that 5875 and 5900 as both fairly key resistance levels for today.
For support, 5807 is the key fib level and since climbing off the 5760 level we have held that a few times overnight. However, below this then 5760 again, but 5710 is the next key support – a long here could well be worth a go today if we slide down there.
As its a Friday, with NFP thrown in, it will probably be wise to be a little bit more cautious today as we may well see some more wild swings later. The NFP forecast is 1400k for today, with 9.8% unemployment. Thats out at 13:30 so bear that in mind today.
So, looking for 5807, 5760 and 5710 as the main supports for today, with 5860, 5900 and 5930 as the main resistance levels. Good luck today and have a great weekend.
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