Market News & Analysis
FTSE rebounds ahead of big earnings as Brexit-sensitive pound pauses rally
Fawad Razaqzada October 31, 2019 12:34 AM
The sterling-sensitive FTSE 100 could find join the global stock market rally, now that the pound has stopped rising as investors await fresh Brexit direction. After so much debate, back and forth, a few extensions and two Prime Ministers later, UK Parliament has decided to call a general election on December 12 in order to break the Brexit deadlock. With Brexit paused for a few weeks, investors will be able to focus on macro factors driving global markets, as well as company earnings.
FOMC hawkish hike likely
The immediate focus will be on the Federal Reserve, which is set to make another 25 basis point rate cut this evening. The markets could rally if the central bank turns out to be more dovish than expected, like the Bank of Canada was today. However, the Fed may opt for a hawkish hike instead – if so, this could trigger a bit of a negative reaction in the markets. Still, with most other major central banks all in easing mode, any potential Fed-related downside could be limited.
Big earnings from both sides of the pond could impact FTSE
Once the FOMC is out of the way, the focus will then turn back to earnings, with quarterly results from tech giants Apple and Facebook due to be released after Wall Street closes. Such is their importance that the results could impact not just the US markets, but global markets too – including the FTSE futures. As far as the FTSE 100 companies are concerned, we will have results from the likes of Royal Dutch Shell, BT, Lloyds Banking Group and International Consolidated Airlines Group all to look forward tomorrow. These are not small companies by any means and the FTSE will move on the back of their results tomorrow morning.
FTSE holds 200-day moving average
Source: eSignal and City Index.
Ahead of the FOMC and big earnings, the FTSE was holding its own relatively well. At the time of writing, it was hitting fresh highs on the day after the earlier drop to the 200-day saw the buyers step in to defend this key moving average. Key support is in the zone between 7230 and 7265. These were previous resistance levels. As long as this area holds, the path of least resistance will remain to the upside. The next upside targets include 7355 and the 7450/70 range.However, if the abovementioned earnings or otherwise causes the FTSE to turn around and it goes on to break below the bullish trend line and recent lows, then this will likely invalidate this bullish view.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.