FTSE 100 live outlook prediction analysis for 27th October 2020
- European and US stocks drop on virus fears
- Dax leads fall after SAP cuts revenue forecast – Dax looking to have locked in its worst performance since late September
- German business confidence dips as outlook sours
- Jack Ma gears up to break yet more records with Ant’s $34bn listing
Stock markets tumbled across Europe and the US on Monday amid rising panic over the second wave of Covid, a fresh crackdown on civil liberties and a brutal update from the Continent’s largest software firm.
Germany led the fallers after Frankfurt-listed IT behemoth SAP slashed profit and revenue forecasts, saying that major corporate clients are cutting back on spending due to fears of more chaos ahead. SAP shares plunged 22pc and the country’s Dax index fell by 3.7pc.
Meanwhile in America the S&P 500 dropped 1.9pc – paring some losses having earlier shed 2.9pc – after positive Covid tests surged to record highs and pressure built for further restrictions to control the disease.
Spanish markets fell 1.4pc and the Milan exchange in Italy closed down 1.8pc as the two countries reintroduced tougher rules to control the surge on Sunday. In Paris, where President Emmanuel Macron has extended a curfew on major cities, shares dropped 1.9pc.
The rout was spread across a wide range of industries, with banks, manufacturers, travel and leisure firms all hit by fears that strict new rules will hammer their profits and make recovery impossible.
Markets Slip
Asian stocks looked poised to open weaker Tuesday after U.S. shares tumbled on concern over rising coronavirus cases and stuttering stimulus talks. The S&P 500 Index had its biggest loss in a month. Treasuries advanced. Futures pointed lower in Japan and Australia. Ongoing fiscal spending talks in Washington continued to weigh on sentiment as prospects dimmed for fiscal aid before the presidential election. The dollar strengthened and 10-year Treasury yields slid toward 0.8%. Oil and copper declined, while gold was little changed.
Time’s Running Out
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on Monday failed again to close major differences on a fresh stimulus for a U.S. economy facing a renewed surge in Covid-19 cases. In their first call since last Wednesday, the two main negotiators still had not resolved language for a national virus test-and-trace program. Pelosi and Mnuchin spoke for 52 minutes, and she remains “optimistic” about reaching a deal before Election Day, her spokesman Drew Hammill said. But with just eight days left and the Senate scheduled to leave town later Monday, the lack of an imminent agreement largely extinguished prospects of any legislation being written, voted on, and signed into law by Nov. 3.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Asian stocks followed their U.S. counterparts lower Tuesday on concern rising coronavirus cases will hurt the global economy and as stimulus talks in Washington dragged on. U.S. futures fluctuated.
Shares fell across the region with declines more modest than those seen in the U.S. overnight, when the S&P 500 saw its biggest loss in a month. Ongoing spending talks in Washington continued to weigh on sentiment as prospects dimmed for fiscal aid before the presidential election. Korean stocks pared opening losses as traders digested stronger-than-expected economic data. Australian shares underperformed.
The dollar slipped and 10-year Treasury yields retreated below 0.8%. Oil climbed and copper was little changed, while gold edged higher.
That was quite a volatile session on the FTSE 100 yesterday and more of what’s to come as we get closer to the election. The S&P dipped below the 3400 level but held 3363 and is now back above 3400. If the bulls can hold this lower level for the moment then we may well see a rise to test the 2 hour coral line at 3434, but we also have some resistance lower down at 3424 on the 2hr chart. Earnings from the US banks has been good so far, and we may well still see that election pump from the bulls. If the support goes though then 3350 is the bottom of the 10d Raff channel for today.
For the FTSE, the bulls need to push past the pivot initially at 5804, and we also have the red 30min coral for resistance here. As such I have gone for a dip and rise day to play out (similar to yesterday morning’s action). Above the daily pivot we have the 200ema at 5823 and then the key fib at 5840, with R1 just a bit higher again at 5854. I am thinking that this 5850 area may well see a reaction if seen this morning on a break of the pivot. Above that then the bulls start to regain the upper hand and 5915 is back on the cards, especially as we have R2 at 5918 for today.
For the bears, they will be looking for a break of yesterdays low at 5756, however there is decent daily support at 5745 area – half way between the key fib at 5756 and S1 at 5740. If we get that low, either first thing this morning on any slide, or later today then I am thinking that we may see this level hold. Below 5740 then 5716 is the recent low, however the bears will probably try to target the 5692 level as we have daily support there as the bottom of the 20 day Raff channel.
So, looking at a dip and rise day, possibly a bit of consolidation after yesterday’s falls. The S&P looks a bit more positive now, as it is back above 3400. The FTSE may well stay in a range for this week between 5900 and 5700. Good luck today.
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