 Good morning and welcome to CMC Markets on Friday the 9th of August and this quick look at the week ahead beginning the 12th of August and it's certainly been a topsy-turvy week for Global equity markets really strong down move on Monday, and we spent the last three days pulling back an awful lot of those losses Nonetheless, I think the outlook is Is likely to remain tricky to predict? We've certainly seen that in the context of how markets have behaved over the last few days You can see that in the FTSE 100 chart the UK 100 chart that I've got here Come off the back of a very strong down move. We've seen three days of fairly decent gains, but we haven't as yet wiped out the losses that we saw on Monday and there's a number of reasons for this sharp sell-off First and foremost, obviously, there's the weaker Chinese one. I'll have a look at that in a minute. That's broken above a very key Resistance level on the daily charts. We've also seen central banks, albeit fairly minor central banks These monetary policy quite aggressively over the course of the past few days We've seen the RBNZ slash rates by 50 basis points. We've seen the Indian central bank cut rates by 35 basis point We've seen the Bank of Thailand cut rates. We've seen the Filipino central bank cut rates as well And with the likelihood that the European central bank will do further stimulus in September and Pressure increasing on the Federal Reserve to do the same thing The outlook for interest rates continues to look bleak if you're looking to generate a return We've seen record low yields on UK Guilts we've seen record low yields on German of Buns and The likelihood is that in the absence of any sort of fiscal stimulus fiscal inputs from policymakers going forward The Direction of lease resistance for yields is likely to be lower and while you might expect that to support equity markets in the interim. I think the prospect that the Spat between the US and China is unlikely to get any better is likely to keep a little bit of a lid on Any rebound that we might see I think the big question at the moment is how much of a rebound Are we likely to get over the course of the next few days and the next few weeks? And there is the next few weeks and there certainly is potential for a bit of a rebound We've seen a strong rebound in the FTSE 100 Wasn't able to really sustain a move below the lows that we saw earlier This year around about May and we still remain well above the lows that we saw at the end of last year So, you know while we've seen a very volatile last few days The losses that we've seen need to be set in the context of where we were at the beginning of the year So they are still fairly limited That being said we have seen other haven buying going on as well We've seen gold prices break out to the upside as well, and I'll be having a look at that chart, too Really, I think make an estimation as to whether or not we can see further gains there So in terms of the FTSE 100 there's certainly potential for us to reach back up towards the 7,380 level Which is around about 100 points higher from where we are at the moment The oscillator is starting to look a little bit oversold on the daily chart If we look on the weekly chart we can also see that we've got a very very long Shadow on the weekly candle which does appear to suggest that there is demand For stocks at these lower levels, but that doesn't necessarily mean that we can't continue to go lower from where we were a couple of weeks ago The the technical outlook does look a little bit soft when you look at the weekly charts in general The same sort of applies to the S&P 500 we can see that here There is certainly potential for us on the S&P 500 to head back to all around about 2960 Simply because it was such a significant pivot level During the month of July given that it was also previous resistance in April and June So 2960, 2970 really need to overcome That resistance level in the short to medium term to revisit the highs that we saw in July Otherwise, there is the prospect that we could actually Start to oscillate lower over the course of the next few days in the next few weeks Again, if we look at the weekly chart we can see here We've posted a bearish weekly reversal But again a very very long shadow on the weekly candle which again suggests that there is potential for a little bit of buying anywhere near these lows around here around about 2720 2730 And on the weekly chart there is also evidence that there's potential for a little bit of a little bit of a short-term Top on the weekly even though the daily is starting to look slightly more positive So looking to the week ahead We've got a weaker Chinese one and we can see that from this daily chart here What's significant about this chart in particular is the fact that we've actually been able to break above The break break break above the highs here at 698 for the first time Since 2008 this this level here at 698 is capped every single rebound Also every single attempt that we've made of it over the last ten years The fact that the Chinese Central Bank has allowed us to break through seven Suggests that we will probably see a slow move higher Towards 720 730 and 740 over the course of the next few weeks And months and that's likely to upset President Trump, but unfortunately there's not really much he can do about it We've got some Chinese data out in the coming days Chinese retail sales and industrial production And from the latest exports data that we saw from the Chinese economy We have seen that the weaker one has actually helped boost exports Chinese exports to other countries other than the US and you know given the current backdrop, it's really difficult to sort of Criticize the Chinese for doing something that the Europeans have been doing for years and pretty much every other Central Bank Has been doing for the last ten So and actually if you look at the one and compare it to the pound Actually the pound has probably been the biggest fall or over the course of the last ten years and you don't hear President Trump criticizing the UK or the Bank of England, but of course that may still happen and That sort of briefly I think that that neatly segues me in to The latest UK data, which is going to be coming out in the week ahead now We've just seen the latest Q2 GDP numbers. It's disappointing a contraction of naught point two percent in the first iteration of Q2 GDP you can see up here in the top right corner here in the intraday insight section of the platform but While the number is Disappointing it's not altogether surprising. We saw an awful lot of front loading in Q1 Q1 we saw a expansion of naught point five percent and When you actually look at the contraction of not point two percent? Yes, it is disappointing But when you compare it to other countries in Europe, it's pretty much in line with expectations Germany is expected to contract by naught point two percent in Q2 when it releases its GDP data Next week At around about the same time as the UK really releases its latest inflation numbers. So in terms of pound That is likely to continue to remain under pressure again I've talked about this in my last week's video very big support around about one nineteen eighty one twenty the figure We've also got decent support around about these lows here Around about one twenty seventy that has managed to constrain any downside for the time being But I think for any sort of stabilization here We are sideways Consolidating between one twenty two and one twenty seventy if we break towards the downside Then we will probably see a test of that one nineteen eighty level if we break above one twenty two Then we could see a move back to one twenty three or one twenty four But at the moment given the current political backdrop It's difficult to really argue for any significant sizable upside in the value of the pound Other UK data that we've got coming out in the coming week Not not only includes CPI which is expected to come in around about one point nine percent with core prices at one point eight Is the latest wages and unemployment data, but also retail sales data So wages is expect wage data is expected to continue to rise in the last set of data that we got Wages excluding bonuses rose by three point six percent, which is was an 11 year high That is expected to go even higher in the three months to June to three point eight percent Unemployment is expected to remain at a multi-year low of three point eight percent and retail sales, which are due out on the Thursday There's there's sort of a mixed outlook with respect to retail sales We saw a very strong rebound in June of one percent Expectations for July are for a decline of naught point two percent But I'm struggling to make the case for a contraction in retail sales in July Simply because of the number of sporting events that happened in July. We had the hot weather We had Wimbledon. We had England winning the cricket World Cup. We had the British Grand Prix So all of those together. I would be surprised if we saw a disappointing UK retail sales Number that being said a lot of economists are expecting a decline of naught point two percent. We will see who is right also looking ahead to the The following week we all have we also have a host of earnings announcements but before I get on to that I want to have a quick look at gold for you because the fact that we've broken above $1,500 an ounce in gold is also an indicator that risk Risk havens are likely to continue to push higher. We've had a significant technical breakout in the last few days I've written a piece on it on the news and analysis section of the website You can find that here. Let me just quickly show you that Cmcmarkets.com news and analysis if you just click on the carousel you can find it there It's right there if you click on it It basically gives you an indication of the analysis that we've talked about with respect to gold prices But I think we should find intraday support in and around 1484 Why because that's a 50% retracement of the entire up entire down move from the all-time highs to the lows That we saw are around about $1,000 an ounce. You can see that better on a weekly chart here There it's much better. Yeah, the breakout of 1380 has prompted this move higher Potential longer-term target by the end of this year early next year could well see us move to the 61.8 level of 1585 but we do need to be aware that we could fall all the way back to 1370 or even 1470 in the short to medium term on any pullbacks We are looking a little bit over ball. So if gold prices fall back, you could we'll see equity markets rebound on the back of that As we look ahead to the upcoming week. We have a whole host of earnings announcements from companies like Walmart US retail sales have been fairly positive over the course of the past few months and Walmart has been one of those few stocks that has actually has been able to take on Amazon in the US retail space So it'll be interesting to see how they do over the course or how they've done over the course of the last quarter And what their guidance is likely to be against a backdrop of rising tariffs rising costs They did say in their last quarterly update that Tariffs might start to impact profit margins. So be looking to towards guidance there With respect to the effect that margins are likely to have on the tech has also been very volatile So I'll be paying close attention to Nvidia's Q2 numbers and Cisco systems Q4 numbers Which are both due out on the 15th and the 14th of August respectively So that's it for this week. Thanks very much for listening Michael Houston talking to you from CMC markets