9th July 2019
The FTSE 100 fluctuated between narrow losses and narrow gains throughout the day, defying the general negativity felt across European stocks from the late morning onwards. Generally, the negative mood brought on by Friday’s reality check had continued to weigh on global markets.
Traders across global markets have had to rein in their expectations after better than expected US jobs data released on Friday undercut widespread doomsaying, throwing the assumption that the US economy is declining out the window. Analysts are now split on whether an interest rate cut by the Federal Reserve – which had been expected to arrive at the end of the month if news had been sufficiently bad — will come at all, or if they might find themselves waiting until the autumn. Traders had been pushing shares higher on the expectation of a pay day when rates are cut, which would likely prompt higher borrowing and growth. Instead, many have found themselves rowing back.
Cuts from New York to Sydney
Deutsche Bank shares plummeted, falling as much as 7.3%, as CEO Christian Sewing’s radical restructuring plans fell flat. CFO James von Moltke said the firm sees about 2% per year revenue growth for the core bank, “with no business growth forecast for our investment bank.” Employees left the bank’s London and New York offices with exit packages in hand as layoffs began. In Asia, the 91,000-person workforce is set to be reduced by a fifth.
Asian equity markets are barely higher after U.S. stocks fell as investors gauged what this week’s Fed speakers will emphasise. Tech shares lead declines. Treasuries edged up, with 10-year yields hovering around 2.05%. The dollar advanced modestly against all G-10 peers, while the lira and other Turkish assets dropped after Recep Tayyip Erdogan sacked the central bank governor. Oil and gold were little changed.
FTSE 100 Trading Signals, Forecast and Prediction
I am still running a portion of yesterdays short from 7562 and the stop is at breakeven on that remainder. Was a shame that it was such a flat day as there is still potential for a drop down towards the 7515 level. There is resistance to start with today at the 7552 and 7555 levels with the daily pivot and 200ema 30min respectively so we may well see some further bears enter at this level. The bigger picture is still showing resistance from the daily chart at 7622 for now so if we were to rise to this level then it appears to be a decent shorting area.
There is also the 2 hour chart in play and it has gone bearish with resistance at the 7585 level from the Hull moving average, and also at 7605 from the daily coral. As such the bulls may fail to reach the 7622 level so bear this area in mind too. We are also just sticking our nose below the 10 day Raff channel that has held steady for a while as well so we may be heading down to the daily supports soon.
The daily chart is still bullish and the 7449 and 7364 levels are showing as support on that, with the bottom of the 20 day Raff at 7466 as well. The ASX200 had a dip and rise play out today, and we may well see something similar for us, with a dip down to the 7512 level. If the bulls can start defending well (and the general news backdrop is quite negative at the moment) then we could still see a rise towards 7700+.
In the trade war saga, the latest is that the US is set to impose duties on fabricated structural steel imports from China and Mexico but will not impose duties on structural steel from Canada.
On the news front today highlights include US NFIB Business Optimism & JOLTS, EIA Short Term Energy Outlook, UK Conservative Party Leaders Debate, Fed’s Powell, Bullard, Bostic & Quarles, and the US 3yr Auction. We are also at 59/100 on the fear/greed signal, and technically in “greed” which will lend further weight to the bulls for the short term.
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