20th March 2019
The strongest surge in jobs added to the UK economy in more than three years has pushed employment levels up to a record high as the labour market continues to defy Brexit uncertainty. Unemployment dropped to a fresh 44-year low in the three months to January after 222,000 jobs were created, almost double the amount expected by economists. The employment rate hit an all-time high of 76.1pc with a record 32.7 million Britons in work. Although Brexit uncertainty has weighed on the economy in recent months, the labour market has confounded expectations with wage growth rising to a 10-year high. Real wage growth has leapt to its highest level since October 2016 as pay packets rise and inflation continues to decline.
The rise in employment was “emphatic” and there is “no sign” Brexit worries are holding back the labour market, said Andrew Wishart at Capital Economics. He argued that companies could be opting to hire workers rather than investing in their businesses amid the heightened uncertainty. Economists believe that the strengthening labour market lifts the probability of the Bank of England hiking interest rates later this year when Brexit uncertainty clears.
Wall Street joined the global rally yesterday afternoon as world stocks push higher for a sixth straight day. The MSCI World Index, which tracks global stocks, has hit a fresh five-month high and almost erased the losses it made in a turbulent final quarter of 2018.
The latest leg of the rally has been fuelled by expectations that the Federal Reserve will reaffirm its cautious stance on further interest rate rises today. The Dow Jones has advanced 0.6pc in New York while the FTSE 100 is on course for a 0.4pc gain ahead of the end of play in London.
China Push Back
Another bad sign for trade negotiations. The U.S. is concerned that China is pushing back against American demands, according to people familiar with the talks, even as President Donald Trump sounded optimistic about a deal. Chinese officials said that while they agreed to changes to their intellectual-property policies, they haven’t received assurances from the Trump administration that tariffs would be lifted. Beijing has also stepped back from initial promises over data protection of pharmaceuticals, didn’t offer details on plans to improve patent linkages and refused to give ground on data-service issues, one person familiar with the talks said.
Deadline for Brexit
On Thursday, the European Union is likely to tell U.K. Prime Minister Theresa May she has three weeks to decide whether to delay Brexit until 2020, or to take her chances on getting her current deal approved in Parliament by July, a senior EU official said. If May decides she can coax a winning vote by summer, the EU is almost certain to reject any further delay if she loses, the official said. If, however, May decides she can’t get a deal by July, the EU is likely to grant an extension into next year.
U.S. Stock Rally Sputters
The S&P 500 Index ended the session little changed Tuesday on word of new roadblocks to a U.S.-China deal. Earlier in the session, the benchmark topped 2,850 for the first time since October. Treasury yields narrowed and Texas crude declined. “The markets have priced in the trade-war resolution, so if there’s any chance this gets extended, delayed or changed, this causes markets to be jittery,’’ said Gene Goldman, chief investment officer at Cetera Investment Management.
FTSE 100 Trading Signals, Forecast and Prediction
As a result of the bearishness yesterday the FTSE and Dax 2 hour charts have gone bearish, with the FTSE presenting some nice resistance at the 7320 level. We also have a red 30min coral resistance line at 7315, along with the daily pivot in this area. As such, if we see an initial rise to this area a short here is worth taking, for a run down towards the S1 level at 7271.
Should the bulls break above the 7320 level then we are probably still on for the 7400 level again, if they can break through yesterdays high at 7351. This area was the top of the 20 day Raff and held pretty well on that initial test so the bulls probably need a bit more oomph to get through it. It sits at 7356 today.
For the bears, we have that initial support at 7271 and then 7161 below that with a key fib and also the 200ema on the 30min. As such they might struggle to break below this as the sentiment is generally still bullish. If it does then 7205 is the next logical support area, though on the longer term charts there are supports showing at 7083 and then the 7040 area.
We have the results of the Fed meeting later today, at 6pm, as well as UK CPI at 09:30. The Fed are largely expected to leave rates unchanged but we will be looking to see what the surrounding rhetoric is and if they remain cautious on further rate rises.
Looking at a range of 7320 to 7270 for today. However, Mrs May is expected to write to the European Union today to ask for a delay to Brexit beyond the scheduled date of March 29. In a letter to European Council president Donald Tusk, the Prime Minister is thought likely to suggest a three-month extension to June 30 in the hope of securing parliamentary approval for her Withdrawal Agreement by that time. A longer delay may well see a rally on markets.
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