FTSE 100 Technical Analysis & Short Economic Update

Wednesday, 4th December 2019 11:53 - by Rajan Dhall

Macro

The FTSE 100 has been in free fall over the last couple of sessions but today we have seen a small retracement.

Key issues surrounding the US-China trade deal sent equities markets nose-diving towards support levels.

One of the main takeaways from this week was the fact that Trump stated he may wait until after the US elections for a trade deal. China has also said there is no timeline on the deal. 

There have been some financial media outlets saying that these could be threats in order to push the "phase one" deal through over the next couple of weeks.

If there has been no material progress or the "phase one" deal does not get done the US may enact the December 15th tariffs.

Today both Bloomberg and Reuters have reported that deal is getting closer despite the war of words between the two nations.

Also as we get ready to vote the Conservatives are still in the lead at the polls but there are some more leaders debates to come (Friday) so keep an eye on the changes to the polls after those events.

Technical Analysis - Wait and see mode

I am afraid we are in a directionless state until the levels noted on the chart below are broken.

Technical analysis is not always fun but there have been a few key developments right at the time it looked like we may break out from the previous wave high.

GBP/USD is also causing the FTSE 100 problems as it has recently broken higher off the back of USD weakness. This is noted as there has not been as much movement in EUR/GBP and other GBP crosses. 

This week travel and telecoms firms have been hit the hardest. A special mention has to be made to commodities companies as the headlines keep rolling in the likes of copper and oil are very volatile. BP, Glencore and BHP have been hard to manage this week and for the rest of the week, it could all change again as Trump is on the wires following his NATO visit to London.

Gold stocks have retraced high following a strong sell-off and if you have a look at Centamin (CEY:LN) you would see a sharp gap higher yesterday. It must be said if the risk appetite returns then they could be heading lower again.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.