24th July 2019
Stocks in London closed higher Tuesday as the pound slipped against the dollar on no-deal Brexit fears as the Conservative party named Boris Johnson will be the UK’s next Prime Minister. The dollar rose for a fourth consecutive day and the S&P 500 climbed higher after yesterday’s gains.
London’s benchmark index closed 0.56pc higher to 7,556.86 while the FTSE 250 closed 0.53pc higher at 19,752.34. Markets in Europe followed suit, closing in a sea of green. Markets in Europe climbed as traders expect a dovish update from the European Central Bank (ECB) this week, and dealers are also predicting the Federal Reserve will cut rates next week too.
Boris Wins
Boris Johnson will be the U.K.’s next prime minister. The public face of the Brexit campaign won the contest to succeed Theresa May, taking over a country in crisis and a government on the brink of breaking apart. He defeated Foreign Secretary Jeremy Hunt by a landslide in a ballot of the Conservative Party’s roughly 160,000 members. Johnson spent the hours after he was elected rallying the troops, telling Conservative members of Parliament what most of them wanted to hear: The U.K. will leave the EU on Oct. 31, and there won’t be an early general election.
Trade On
China and the U.S. will resume face-to-face talks next week, with U.S. Trade Representative Robert Lighthizer set to lead a small team of senior officials to Shanghai on Monday, people familiar said. Negotiations are scheduled to run through Wednesday. It will be the first in-person meeting since the process broke down in May. It’s probably a good thing that Christopher Wray wasn’t invited. The FBI director told U.S. senators Tuesday that China is engaging in a sweeping effort to steal its way to economic dominance, with more than 1,000 investigations underway on intellectual property theft “almost all leading back to China.”
Gloomy Outlook
The IMF cut its global growth outlook again and suggested that policy “missteps” on trade and Brexit could derail a projected rebound. The world economy will expand 3.2% this year and 3.5% in 2020, both down 0.1 percentage point from April projections. A rate of 3.3% or lower would be the weakest since 2009. China was predicted to expand 6.2% this year and 6% next year, both also down 0.1 percentage point. The U.S. forecast was to 2.6% and 1.9% respectively.
FTSE 100 Trading Signals, Forecast and Prediction
We dropped off from just under 7600 yesterday as we broke the resistance level of 7585 but failed to reach the 7620 resistance area. Having now dropped back to 7560 from there, we may well continue to see the shorting of the rallies play out. There is initial support this morning at 7550 as daily, and then 7540 where we have 2hr and 30min support. The bulls will be keen to drive this back up to 7600 and then higher, but with the top of the 10 day Raff at 7598, and the double top with yesterday they might have a job to push past that. Continue to keep an eye on cable as well, which has once again bottomed out at 12400, and may well climb as the new Brexiteer dominated UK cabinet is formed by Boris.
The Dax is testing the top of the 10 day Raff channels also at 12530 so we may well see an initial dip on that this morning, especially following the poor Deutsche Bank earning for Q2 released this morning. A break of 12560 though and it is likely to rise towards the 20 day at 12635.
Back to the FTSE and if the bears were to break below the 7540 level then 7525 is next up where we have the 2 hour coral support line. The bears of course are still aiming to take this down to 7450 but the bulls are certainly fighting to keep it higher/climbing. Below 7450 then a drop down to 7395 is the next target for them.
There is a small dividend of 2.81 today.
Could be an interesting session today and looking to short the rallies now we have had the rise to 7600 yesterday. Does look like we might well retest that area (and still possibly 7620) but a drop down towards 7450 looks possible as well. Good luck today.
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