The FTSE followed Asian markets higher on the open as stimulus hopes tempered recession fears. Risk appetite continued to rebound, albeit cautiously following a disastrous week for stocks last week. Riskier assets such as stocks are nudging higher for a second day, whilst safe havens such as gold, the yen and bonds are falling lower.
1. ECB’s Olli Rehn pointed towards more "impactful" monetary policy measures.
2. China unveiled plans to cut corporate borrowing costs.
3. Several central banks have cut interest rates
4. Eyes are turning towards the Fed Jerome Powell’s speech at the annual central bankers meeting at Jackson Hole, Wyoming on Friday.
The next move by the market depends on whether Jerome Powell will indicate another slashing of interest rates is on the cards, potentially for September. An indication that more stimulus is around the corner could see risk sentiment pick up further.
FTSE levels to watch:
The FTSE continues to rebound from last week’s 6 month low. Yesterday saw the FTSE rally 1%. Today the FTSE is picking up where it left off. A break through 7245 could open the door to 7305 We are looking for a break through resistance at 7305 to negate the current bearish outlook.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.