FTSE 100 live outlook prediction analysis for 18th March 2020
The FTSE 100 and 250 diverged on during Tuesday’s session, with the blue-chip index notching up moderate gains as the mid-caps fell. Coronavirus fears continued to batter a range of firms hit by new restrictions: Cineworld’s share price was cut nearly in half after it announced plans to close all locations “until further notice”.
Oil prices meanwhile hit a fresh four-year low as the outbreak crushes demand amid a supply glut triggered by a price war between Saudi Arabia and Russia, prompting Goldman Sachs Group to cut its Brent forecast for the second quarter to just $20 a barrel. Brent lost $1.32 to end the session at $28.73 a barrel on the ICE Futures Europe exchange.
Chancellor Rishi Sunak said the Government will do “whatever it takes” to fight the economic shockwaves of coronavirus, as Boris Johnson promised to put the country on a “wartime” footing. Mr Sunak unveiled a unprecedented £330bn loan scheme to support businesses, amid a raft of “direct support” measures including tax cuts, millions in grants and mortgage holidays. The PM said: “We must act like any wartime government and do whatever it takes to support our economy”
The Dow Jones has closed 5.2pc higher, a jump of more than 1,000 points, on expectations of huge US stimulus. The S&P 500 gained 6pc while the tech-rich Nasdaq rose 6.2pc. It’d a different story this morning though as futures have tumbled again.
Global Recession
There was talk towards the end of last year about recession, but it didn’t happen. Not so now. Goldman Sachs and Morgan Stanley economists joined the rush on Wall Street to declare that the coronavirus has now triggered a global recession, with the debate now focusing on its likely length and depth. A day after President Donald Trump conceded the U.S. slump alone is set to be “a bad one,” economists threw away their forecasts that the world could avoid tumbling into recession for the first time since the financial crisis. Behind the rethink: The virus’s spread to Europe and the U.S., as well as new evidence that China — the first to be hit by what is now a pandemic — experienced a harder hit to its economy than originally projected. So how deep will it be? Morgan Stanley’s team said a worldwide recession is now its “base case,” with growth expected to fall to 0.9% this year. Goldman Sachs is predicting a weakening of growth to 1.25%. S&P Global added its voice to the chorus with a report expecting that growth would range 1% to 1.5%.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Yesterday’s rise has been wiped out overnight, but we have support initially at 5000 round number but more importantly 4979 below this, from the 2 hour chart. S1 is just below this at 4952. If we do get an initial bounce, maybe on some optimism following the chancellors pledges yesterday and as it gets digested, we may well see climb back towards the 30min coral resistance at 5204 for today, but as that has now gone red following the overnight drop, we may well stutter at this level.
Should the bulls push on then we may well see a rise towards 5300, with 5350 above that. Seems that might be a big ask but with volatility the way it is a 300 point rally wouldn’t be impossible!
On the support side of things, below the 4980 then we could slide as low as the S2 level and daily support at 4792.
We nearly got to the top of the 10 day Raff channel yesterday having bounced off the bottom at 4850, but having now dropped back the bottom of that is now at 4430. The top remains at 5315 for today. The 10 day channel has been working well during this turmoil so keep an eye on those points.
Not much more to say really today, watch those key levels and protect capital!
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