FTSE trying to break key resistance as elections near

As my colleague Fiona Cincotta reported earlier, European markets extended their gains this morning amid the lack of any fresh news with investors continuing to fade the dips due to ongoing optimism over a US-China Phase One trade deal. In the UK, traders are also watching polling data closely ahead of the December 12 general election. So far, we haven’t seen any major swings in the polls to impact the pound or the FTSE in a meaningful way, with the business-friendly Tories still remaining the firm favourites to win the majority.

If the polls are correct and the Conservatives do end up winning the majority of the votes, then the UK will almost certainly leave the EU on January 31 after two extensions and three and a half years since the referendum which divided the nation. The UK will then enter a transition period and trade negotiations will commence. At last, there will be some certainty in so far as Brexit is concerned.

Meanwhile, in the event of an election shock, it will most likely be the pound rather than the internationally-focused FTSE that may show a negative reaction. In fact, a drop in the pound may even support the index as we have seen so many times in the past.

So, the outlook on the FTSE appears somewhat positive in the short-term. However, with the US stock markets rallying to severally overbought levels, there is a growing risk we may see a sharp sell-off in one of these days on Wall Street. If that happens, then global equities may fall as well, which could put downward pressure on the FTSE as well. So, we are just cautiously bullish on the FTSE at this stage.

Source: eSignal and City Index.

Technically, the price action on the FTSE has been more range-bound that its European peers, and nothing like the US indices, possibly reflecting the uncertain political situation domestically. However, it has been trying to carve out a bottom and today it was peeking above old highs in the 7420-7433 range. Thus it may be on the verge of a breakout from the range it has been stuck inside since early August. A clean break above this 7420-7433 range is what the bulls are looking for now. If seen, future dips back into this region could be defended, potentially leading to further gains. A potentially stronger support level comes in just ahead of the 200-day average (7315) around 7335. Meanwhile, a couple of potential resistance levels or bullish objectives to watch out for include 7463 and 7536, levels which were formerly resistance.

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 www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.