 Good morning and welcome to the Monday market update with me David Adam Today's date is Monday the 27th of January 2020 and the time has just gone 1155 GMT and Basically, there's only one story in town or one major story in town And unfortunately the coronavirus situation appears to be getting worse The situation in China is particularly bad. We're unfortunately At least 80 people have passed away from the virus and more than 2700 infections have been confirmed as well. So the rate of which This health crisis is spreading as really alarmed markets it's obviously not just in China, but that's where the epicenter is and They could fall out on European financial and European stock markets that has been essentially Anything that is has somewhat of a connection or exposure to China is feeling is feeling the front of the pain So if you look at Mining companies and the American be a few billet in Rio Tinto We've seen heavy sell-offs in the in iron ore and in copper. We've seen a large fold in underlying oil markets So BP roll that chill ton a wall there in the red. We've also seen anything in the travel sector So long haul airlines left hands over in Germany KLM International Castellan airlines group the parent of British Airways Erlingas, Iberia They're all in the red hotel groups are lower luxury brands are feeling are getting hit as well So companies like Burberry LVM H And the likes high-end European luxury brands including Remy Quantrow who have large Who have seen large Large revenue rises come from China in recent years. They're all been hit So it's very much a healthcare story is across the board what we're seeing on top of that as well We're seeing a move out of equities into assets Such as this goal that are deemed to be that are deemed to be lower lower risk bit of movement But we have seen a bit of dollar yen is a bit lower. So there's a bit of yen buying going on not a massive amount But nonetheless, it's essentially kind of one story. It has multiple kind of tentacles multiple ways of kind of finding out is what's driving the financial markets today So what I'll do now is always is take a quick look at the weekly head article I've run through that and then I look through the major stocks currencies and commodities So taking a look at the week at the weekend article if you go to cmcamarkas.com and under insights and under news Analysis, you'll be able to find the article. So look ahead to tomorrow. We have the UK CBI this Distribute trade survey distribute apologies distribute trade survey That's going to be pretty important keep mine because we have the Bank of England update the meeting on Thursday, which would be mentioned in the second on Tuesday we have Q1 figures from Apple We have four quarter numbers from Boeing on Wednesday We have the update with the interest decision from the Fed reserve and to balance I imagine it's fairly It's pretty cool. I imagine it's fairly on interesting To us economy is a decent shape Unemployment is a kind of, you know, is extremely low wages of coups ever so slightly But there's still not come to evolve inflation and more importantly recent updates We've heard from the Federal Reserve at the back end of 2019 rather would suggest that given that up ahead three interest rate cuts in the second half of 2019 it seems like the fairly content to sit in their hands and any economic indicator as we've seen In the last few weeks or even say a month or two has been fairly respectable to say the least Q2 figures from Microsoft keep an eye out for cloud technology. That's that's that's a bigger part of their business And it's a very proper industry We have Q4 numbers from Tesla No pun intended, but they've been their share price has been driving higher recently The share prices sets in mass some records in the last week or so I said just being the phenomenon could have moved to the upside in Tesla, you know, keep an eye out for future guidance because You know, we have seen kind of companies take share prices take off like this before and all of a sudden people have very high expectations and if those like as high expectations are matched by Optimism from the company You can't lead to a sharp turn around On the Thursday, we also have third quarter numbers from BT Thursday, we have full full year figures out from roll dot shell I probably most possibly the most important of the week. It's going to be the Bank of England interest rate decision This time last week or just just a while about 10 days ago There was summer in the region of Ace, you know, there was a 75% chance There was a fairly high chance circa certain chance of an interest rate coming interest rate cost being factored in from the Bank of England In a latter half of last week created very respectable unemployment numbers And on top of that wage numbers were decent as well We had not day from the from the CPI that was what's an amazing, but it was a step in the right direction And with that we did see a tapering off of those of those interest rate in both of the probability of a rate cut Back to around 50% circa 50% So it's cool for a 70% chance of a rate cut to a 50% chance of a rate cut So we're still, you know, could happen Also keep in mind if you look at the flash UK manufacturing services and PMI reports provided just gone You know both the services had a nice decent enough pick up and manufacturing even though it wasn't too impressive It was an improvement on the previous month's final reading On Thursday, we have fourth quarter cloth figures from the US and on Friday. We have Eurozone CPI numbers Apologies, we are the flash Eurozone CPI numbers Just start the ball rolling out with the major indices starting off with the FTSE 100 So in the middle of the month the FTSE was at a multi-month high up around levels last seen in the summertime And now look we are so we've had a fairly sharp sell-off in the last in the last few sessions fairly aggressive move to the downside We're currently trading around 7,420 there. They're about just south of it If we do look to press on lower from here, we could be looking at targeting this yellow line here the 100 movie average And that comes to the play at 7370 We can see it a few occasions In the last in the recent months that metric has actually, you know, well The combination of resistance and also support so if the metric has been important in the past It also makes it more likely it'll be so it'll be important in the future We can also see that it's almost, you know, basically converges with the 200 movie average this red line here And the 200 movie average is viewed by some traders as a fairly decent metric Or gauge of how strong or weaker market is if you're above the market strong and if you're below the market's weak so This this is out here could act as support to further to further move to the downside And even if you go below that the community targeting 7,300 Once again, we saw some consolidation in that price price area in around late october and november Um, we really would need to be kind of heading back up here and clearing 7,500 before we can begin to think Or maybe the uh, the fear the the reason the reason downtrend has come to an end And should that be the case then you need to be looking at taking out the late january high here Uh, and then if you go beyond that we can then be looked at then you can then become more confident at the wider upward trend Uh, of the last few months is in play is back is back in play We'll take a look at what's going on in germany Germany is coming in from a fairly high uh from a high starting point. Uh, only last week we saw the uh, the dax Um register a fresh all-time line only for the market obviously to move across to be lower today So we can see here that it's pretty much on the 50 moving average this blue line here and that comes to the plan in at 13,280 Uh, we're currently just south that's where we're there thereabouts If we do see further losses from here we could really get targeting this zone down around here It's some of the region of around 12,900 there thereabouts We can see that that area acted kind of as as a consolidation zone in october On a few occasions in a general region, maybe just between say 12,900 and um 12,960 Nine that zone there, uh, we have seen that area acted support in the past So it makes it more likely that will be important in the future Uh, we really would need to be kind of retaking 13,500 before you look to kind of think that okay Maybe the downward trend has come to an end and then if you go beyond that We could then be looking at retesting the record highs in around 30,640 It's a fairly similar situation with the u.s. Markets whereby not that long ago They were at all-time highs and then they've suffered a suffered a fairly uh, fairly sharp decline Between Friday session and also today as well put in mind, you know We've had pretty big losses in the last few trading sessions And yet we're still comfortably above the 50 moving average So I'll give you an indication of how how strong that what some would some would say is strong Some would say how overstretched us equities were in advance of this Uh, so be too pressed on lower from here. We can head below this line here in around 28,500 We could look ahead towards this blue line the 50 moving average And that comes into play at 28,418. So this zone could act as a board for further losses We can Stretch our chart back to this area here. We can see that back in uh, back in October a few occasions The 50 moving average should provide a support. So it could be important again in the future We really we need to be kind of taken out say 28,800 And then if you go beyond that we could then be looking up towards 29,000 big psychological number And if you go beyond that we could then be looking at retesting The all-time highs of some in the region of 29400 In mobiles like this, obviously the situation appears to you know is clearly getting worse in china and and also around the world But it's a mobiles like this traders. It's often worked for johua taking stock of where we've come from And how much how much stock markets have rallied in advance in this So it's you know, I know it's very easy to say when you're in a thick of it going Just keep a cool head and take a look at the wider view, but the wider trend here I'm not looking at the s&p 500 is still very much to the upside. So it's obviously difficult, you know Should send them in change Where can we see a turnaround if you do see a turnaround in the near term? But just keep in mind Right, the markets were exceptionally strong in advance of this Like I said, we've had a couple of large sell-offs in the last couple of sessions And yet we're still no in here the 50 moving average on the this blue line here on the s&p 500 So things are very clearly strong in relation to the u.s market So if we do press on lower from here, we're currently in around 3,248 If you press on lower from here, we could look at retesting the 50 moving average at 3,204 If we do move to the upside we head back up towards the 3,300 mark And if we go beyond that we could then be looking at retesting the old-time highs I'll take a look at the the pound versus the u.s dollar as I mentioned We have this week we have Interest station from the Federal Reserve and Bank of England and the latter the Bank of England one It's going to be far as far likely to be the more exciting of the two So broad view is that pound as in pushing higher against the u.s dollar for the last few months since since september We're holding nicely above this blue line here the 50 moving average Which comes to the play in around one spot 30 50 and and if you continue to hold above it It's likely to get a wider upward trend will continue So if we press on higher from here the Kubilik you're targeting 130 one spot 32 And a move beyond that could take us up towards one spot 32 84 If you do move drop below the 50 moving average We could likely head back towards the psychology important one spot 30 area And if you go below that the Kubilik you're heading down toward this zone here down around one spot 29 We can see that we saw some consolidation in that area in late november and even when it slowed off in Late december it didn't even get as quite as low as 129. So a break below one spot 29 Would which could point to further losses Take a look now a euro dollar to be fair. It's been fairly boring for the last few months But it's been a bit more interesting recently because it seems that the I think of They kind of the medium term upward trend appears to be coming to an end You had a multi month higher here in early january beginning of the month And then we have a lower low a lower high and the valuation of lower low So we do pretty pressing lower We're seeing a steady increase in negative momentum So the downward trend in the market is being confirmed by the steady increase in negative momentum So it appears that the bears are in control We're currently trading at one spot 10 24 If you press on lower from here, we can look at your targeting one spot 10 And if we break below say this area here in a one spot 0 9 80 It could look it could set us back down towards the 109 zone down around here If we do move to the upside Could we found persistence rather it could be found for this blue line here The fifth that moved the average in it just just south of one spot 11. Yeah one spot 10 Oh one spot 10 97 And if you go beyond that we could be looking at targeting then The the mid january high and at one spot 11 72 as I mentioned Oil has had a Quite a size of movement of downside China's an energy booster of all in the world The fear is that the health crisis that unfortunately China's going through could have a negative impact on economic activity Uh, so with that we're seeing a fairly sharp sell-off in the oil market So, you know, you can see here that we're letting you for falling back to levels last seen in about October mid October So you can be an indication of how steep the sell-off has been now If you take a look at this trip if you draw a line between the lows early October and the lows of mid October You get this line along here. It's also good. It's also was acting as support. I was a was acting as a nice trend line Back it back through early early Sorry mid to mid january But we can see here because it bounced off at a few a few occasions But we can see here once it finally had an aggressive sell-off through it It kind of fell all the way through it So and it's not really a surprise that we had a large in a very bearish move Which took us solidly below the trend line and even pushing lower ever since So if you continue to press on lower from here, we could be like you're targeting this area here Down around 51 hours of hour or potentially down as well as 50.36 Any kind of rebounds in wti Would need to kind of take out ahead of board this area here First of all with the with the red line here is the turning moving average in a 57 spot 40 And if even if you know we would be on beyond that What was the trend line which was acting as a port could not be active resistance So we need to really kind of get back above that metric You need to get back above that in around kind of 58 85 there that's 58 spot 85 there thereabouts Before we're going to become confident Of the further gains on the horizon for wti That's wti. I take a look now a break route Similar situation here We've had an aggressive move to the downside in the past few sessions levels last seen in mid to late october So we'll be clearly in a in a downward trend if you press on lower from here We could be looking retesting this area here in around 56 spot 71 Any move to the upside could run into resistance from the dirty moving average We can see that it was acting as support for a bit In the middle of the month and then we're going to eventually kind of had a size of break below It kind of just really took off So we could really get retesting if you have you seen these back you could run into resistance in around 64 spot 17 And lastly, I take a look at gold golds has been a beneficiary Of the uncertainty in the financial markets So we're seeing metals like we're seeing oil fall. We're seeing stocks fall. We're seeing copper fall. We're seeing iron or four full What we are seeing is gold rise and this is what some money is going into So the market's back up a level last seen in mid january early january rather. This has been on the back of the iranian tensions So we're pressing higher here. We're currently trading around around 15 82 If the market continues to press on higher from here, we could be looking at retest the psychology board 1600 dollars area A metric and if you go beyond that you can then be looking directly at the highs of january in around 16 11 If you do have a bit of a pullback We could find some support from this general area here in around 15 60 And it's only really if you take a size of break below this area here 15 36 the kind of the low of mid january It's only really if I have a decent break below that because then we begin to think okay Maybe the upper trend has come to an end Thank you for listening. That's all from me this week. Have a good trading week and tune in next week. Thank you