FTSE to 7245 on trade deal and stimulus optimism?

Risk appetite improves on trade talk hopes & stimulus plans

Following a stronger session in Asia overnight, the FTSE powered higher on the open. Last week fears of a global recession amid the ongoing US – Sino trade war dragged on sentiment. As the new week kicks off risk appetite is improving; stocks are in demand amid increased optimism over US and China reaching a trade deal and as investors anticipate stimulus measures to sure up slowing economies: 


1. Germany has said that it will increase spending should the German economy fall into recession. Given that Germany contracted in the second quarter and data points to further softening in the third quarter a recession is looking increasingly likely. 

2. China also joined the stimulus chorus, unveiling measures to reduce borrowing costs for companies to sure up its slowing economy. 


3. Adding to the optimistic atmosphere, President Trump also expressed optimism over reaching an agreement with China. This would address what is considered the root cause of the global slowdown.

4. Central bankers will be meeting at the end of the week at the annual Jackson Hole meeting in Wyoming. The meeting takes place to a backdrop of financial markets flashing recession warning signs, adding to rising pressure for further support from central banks.

Yields ease, gold falls and Fresnillo drops to the bottom of the FTSE
Last week’s safe haven trade is unwinding, gold, bond yields and Japanese yen are seen moving lower in early trade on Monday. Precious metal miner Fresnillo, which has benefited royally from gold’s impressive rally over the past few weeks was tracing the precious metals lower in early trade, topping the FTSE loser board.

FTSE levels to watch:
The FTSE is clawing back some of the lost ground from last week. Whilst the index is moving higher, it still remains below its 50, 100 and 200 sma on the 4 hr chart; a bearish chart. The Index would need to break above 7245 and then 7305 to negate the bearish outlook.


Disclaimer

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.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.

StoneX Financial 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.