FTSE 100 live outlook prediction analysis for 12th October 2020
Renewed hopes for a US relief package buoyed markets on Friday, putting Wall Street on track for its best weekly performance since July. The S&P 500 and Nasdaq Composite both bounced after markets opened on Friday, following claims that Donald Trump had approved a stimulus package. Earlier in the week, he had suggested any further Covid support package would need to wait until after the presidential election, but in recent days, Mr Trump has reportedly become concerned at the stock market reaction to his comments, made on Twitter.
Wall Street led gains across global indices, and the FTSE 100 closed up 0.65pc on Friday.
Cooling the Yuan
China’s policy makers acted to restrain a rally in the yuan by removing rules that made betting against the currency expensive. Financial institutions will no longer need to set aside cash when purchasing foreign exchange for clients through currency forwards, effective from Monday, according to a statement from the People’s Bank of China. Banks previously had to hold 20% of sales on some foreign exchange forward contracts, a move imposed two years ago when the currency slumped toward 7 per dollar. The offshore rate dropped as much as 0.7% against the greenback in early Monday trading.
Stimulus Saga
President Donald Trump and House Speaker Nancy Pelosi blamed each other for a lack of progress on a new plan to support the U.S. economy, while a senior White House aide said he expects talks to continue and a Fed official said fiscal help is sorely needed. After a week of shifting signals on the amount of stimulus and how to get there, Trump said on Fox News that Republicans are “having a hard time with Nancy Pelosi.” Pelosi labeled the administration’s offer on dealing with the health impact of the virus pandemic “grossly inadequate.” White House economic adviser Larry Kudlow said earlier he expects Treasury Secretary Steven Mnuchin and Pelosi to hold more talks this week. Mnuchin may increase the amount of aid the administration is offering, Kudlow said on CNN’s “State of the Union.” While a stimulus deal isn’t essential to the U.S. recovery from the coronavirus pandemic, “I don’t think it’s dead at all,” Kudlow said.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The offshore yuan fell after Chinese policy makers acted to restrain its strength by making it easier to bet against. Most Asian stocks gained led by China.
The yuan fell as much as 0.7% against the dollar, which ticked higher against major peers. S&P 500 futures fluctuated after the benchmark ended higher last week, with some traders betting lawmakers are moving closer to reaching an agreement on stimulus. Chinese shares led regional gains as investors mulled an expected visit by President Xi Jinping to Shenzhen this week amid optimism he could unveil plans to further open parts of the economy to foreign investment. Hong Kong stocks also climbed, with a more modest rise seen in South Korea and Australia. MSCI’s gauge of Asia Pacific stocks was at the highest since June 2018.
Elsewhere, Japanese equities bucked the trend and retreated. Crude oil declined and gold slipped. Treasuries won’t trade Monday due to a U.S. holiday.
The bulls have managed to keep the FTSE above 6000 since capturing this level on Friday, though bit of a shame we dropped off 6041 Friday and just missed the 6045 resistance level. However, that remains valid for today and we may well see an initial dip off this again. Above 6045 then I am looking at the R3 level and top of the 20 day Raff channel at 6095 as the next major resistance level.
On the S&P the bulls have continued to buy it up, helped by the stimulus talk, and we are now at a decent looking resistance level at R1 at 3497. The RSI is a bit overbought at the moment, and I wouldn’t be surprised if we get a little dip back to reset that, and a test of the 2 hour support initially at 3465. Below that then the daily chart has now gone bullish and has 25ema support at 3390. We also have a 200ema and S3 level at 3429 which may well be seen this week. For today we may well remain a bit more bullish (bull Monday after all) and hover around this 3460-3500 area.
For the FTSE, the charts are all quite positive to start the week. If we follow that US pattern then the rise should well continue with a possible test of the 6150 10 day Raff channel soon (and rising, so maybe even 6200 this week). I can see the usual Bull Monday, bear Tuesday pattern playing out again though, but watching that 3500 S&P resistance level to start the week.
If the bears break below 6015 then 5975 is the next major support with 5960 25ema on the daily below that. If it goes a bit pear shaped for the bulls though, then the 5929 level is next up. That has held well recently, but a break of that and we are probably on for a slide down to 5890. That said, I am looking at the 6015 level, and possibly 5975, holding today.
Boris is announcing further C-19 measures today expected to be this 3-tier lockdown system, with further regional lockdowns. Further stimulus has been given out to the arts and and culture industries who continue to feel significant hardship. £267m approved earlier for theatres etc.
Good luck today, still feels like buy the dip on the FTSE is the right pattern, at least today, and watching 6015 and 5975 as support. 6045, 6095 as resistance.
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