FTSE 100 live outlook prediction analysis for 12th August 2020
Here’s a quick recap of yesterday’s events:
- Stock markets rose initially on optimism that lawmakers in Washington will hammer out a new stimulus package for the crippled American economy.
- European equities got an extra shot in the arm from economic surveys painting a brighter picture than had been feared for the area’s recovery prospects.
- The Bank of England will do more, faster quantitative easing if the economy slows again, deputy governor Dave Ramsden has said.
- Confidence among investors in Germany soared to its highest level in almost 17 years in August, according to the ZEW institute’s monthly barometer.
- The S&P dropped off the bottom of the 3380-3399 resistance zone
- Gold and silver tumbled
Another 114,000 Britons lost their jobs during July as signs of a virus-driven crisis in the UK’s labour market became increasingly apparent. According to HMRC data, the number of Pay As You Earn payrolls – which exclude the self-employed – has dropped by 730,000 since March. Claims for income support also jumped, with 2.69m people now claiming either Jobseekers’ Allowance or certain unemployment-related versions of Universal Credit. In a sign of slight hope, the number of job vacancies picked up slightly last month.
The UK suffered a record decrease in hours worked between April and June as vast swathes of the economy were left on pause, with the total dropping to its lowest level since 1994. Against economists’ expectations, the overall unemployment rate barely changed, despite the sharpest drop in labour force employment since the financial crisis.
GDP contraction – UK GDP fell by 20.4pc in the second quarter
Today saw the UK crash into a deep recession after the worst quarterly fall in output since records began. Britain’s economy contracted by 20.4pc during the second quarter, leaving it as the world’s worst-hit major economy. Output continued to recover during June, but wasn’t enough to counteract a plunge that put GDP back at levels last seen in 2003.
Running Mate
Joe Biden chose Senator Kamala Harris as his running mate, betting that her ties to the African-American community and self-branding as a “progressive prosecutor” will help propel him to the White House. Harris, 55, who ran against Biden in the Democratic presidential primaries, becomes the first Black woman and first Asian-American woman on a major party presidential ticket. Known as an aggressive campaigner, the junior senator from California has won statewide elections in the most populous U.S. state three times. She built her early career as district attorney of San Francisco and later California attorney general. Harris tweeted her reaction, pledging to help Biden defeat President Donald Trump.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Most Asian stocks retreated Wednesday amid doubts over the timing of a spending package from Washington and some position-trimming in high-flying sectors. The gold selloff entered a second day after it tumbled the most in seven years Tuesday.
Shares fell in Shanghai, Sydney, Hong Kong and Seoul, and European futures pointed lower. Japanese stocks bucked the trend. S&P 500 contracts fluctuated after the benchmark fell for the first time in eight trading sessions Tuesday as investors sold some of the rally’s biggest winners. Some traders cited comments from Senate Majority Leader Mitch McConnell saying stimulus talks are at a stalemate as a catalyst for the declines. Treasury yields held their overnight rise. The dollar pushed higher against its major peers.
The bottom of the resistance zone at 3380-3399 on the S&P saw a decent reaction with a 60 point drop off from 3385, as gold and silver also took a tumble yesterday.
The ASX 200 had a bearish session Wednesday and as such we may well see an initial drop on the FTSE. 6166 has initial 30min resistance. We have the key fib at 6101 for initial support, as well as 6116 for the 100 Hull MA on the 2 hour chart. The FTSE 100 futures actually held up pretty well yesterday as the US sold off, only dropping 50 or so points at the time. As such, we may well see that strength maintained today and a rise towards the daily coral line at 6227. We also have the top of the 20 day Raff here.
The FTSE has been lagging the US markets rise, pegged back by cable mostly. The jobs data yesterday was shaken off and we got a rise to 6205 before dropping off a bit, and as such we may well see some more upside yet. The 2 hour chart remains bullish as well. The S&P pullback from 3385 does fit the pattern quite well for a dip and then another leg higher towards 3450 or higher as mentioned earlier in the week so it will be worth bearing that in mind to play out. 3290 is the main support level to watch.
If the bulls were to break above 6227 today then 6277 is the top of the 10 day Raff channel and the next level of note to watch.
If the bears break below 6090 then 6071 is S1, then 5999 for S2, though we do also have 6075 for another test of the green coral on the 2 hour chart. I am thinking that the 6090/6100 area will hold today though if we get that low. We of course have the 26 point dividend today as well so that may well help support some bullishness.
So, stay nimble as the low volume choppy August is always tricky! Good luck today.
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