 Hello and welcome to the weekly market update with me David Madden. Today's date is Tuesday the 28th of May 2019 and the time of just count 1135 British summertime It's been a bit of a negative start to the to the European session That's probably the most Important financial markets news has been that there's the possibility of a new row escalating between Brussels and the Italian government essentially the EU have criticized the Italian government for that their death situation to get out of hand and And they're a threatening discipline and that could lead to the Italian government Being hit by the fine of up to four billion euros on the other side of the coin The the Italian joint deputy Prime Minister Matteo Salvini Has a setback of a single you use all of his energy to fight back against the outdated fiscal rules of the European Union, so With that political tension on the horizon We have seen an increase in Italian government bond deals that in turn has has put pressure on the Italian banking system Which of course has enormous exposure to the Italian government bond market and there is just the old Italian debt fear is resurfacing obviously the eurozone is quite interlinked so if the concerns over Italian banks that spreads out across the region wide and Italy has always been at the back of traders minds Italy is sitting on a mountain of debt. It's running a budget deficit It is and on top of that we've just the tiny economy is just recently come out of recession So the last thing the administration role wants to do is rain in public spending with the risk and send the economy back Into recession and Italy keep mind, you know is one of the largest economies in the eurozone, so If there is to be a kind of a full-on Financial crisis or banking crisis like we saw in other countries Such as you know Portugal or Greece or Cyprus that are maybe it is a different story It's it's a third largest economy in the eurozone and do that really flare up and erupt It could have a major negative impact on Europe on the EU as a whole Speaking of the EU we have the European Union elections over the weekend The kind of takeaway points have been the kind of traditional Bit well established parties in all the various different countries did not do well And there's a kind of a move towards a one-sided divide The more you're a skeptic parties And also that she and all the countries is more does move more towards the Green Party So looking at the UK the Brexit party topped the polls in the UK The the national rally formally known as a national front in France They're they're they're tipped. Well, the country is completed. It's looking highly likely that they have Won the one in France And all as I mentioned the the large the largest party in Italy at the Liga party party of Latteos that be any there are they're also Look to look appear to be the the the biggest winner from the EU elections. So In a number of large EU countries and other UK's even the European Union, but a number of large EU countries Anti-eupon and anti-euretoric is on the rise So we could wind up in a scenario where we when you know when we have the first sitting of the new Brussels Parliament The EU Parliament we could have a scenario whereby a sizable chunk of the politicians are actually opposed to the European project and that could lead to a kind of longer term Structural issues because if there are many if they're a size of a Proportional policy makers who are against I could continue to integration and various different policies of the European Union and I might make Decision-making in the European Union quite difficult, but also it's been kind of a shot across the boughs to the Kind of no usually the kind of slightly Center slightly right center well established parties in old and all across Europe They need to really kind of pull the socks up as it were because they lost out some of them lost out to greens and some of them lost out to More right of center further right further right of right of center Anti-euroskeptic parties, so we have seen a bit of a sell-off in eurozone equities The Italian market no surprise there is probably the biggest decline or the US China trade situation continues to rumble on You know in the last 12 48 hours you heard from President Trump who stated that The US isn't ready to make a deal with China yet He was talking about how China should have taken the deal that that was on the table if you know a few weeks ago Before it's like the renegotiate that situation is is kind of it's bubbling away President Trump is over in Japan at the moment He's looking to readdress the balance and trading a balance in between the United States and Japan But that appears to be a bit more a bit more friendly But keep in mind the China story has been hanging over the markets for the last few weeks And to be fair on and off has been hanging over for seven months now So it still isn't out the woods yet So given that we've you've seen a bit of pressure on economic markets in recent weeks It's likely we could see further pressure in the near term So I'll start off by looking at them at the foot two hundred and see how things are playing out so The wider upward trend is still very much intact We can see a nice series of higher highs and higher lows and this has been a very common theme you know rally between late December and An April or maybe early main some cases has been a common theme across European and US equity markets and Asian equity markets Basically trial 2019 But if you take a look at the foot two hundred here We can see that the market as unfortunately is held even though we even though we had them that the sell-off in Made them and made me managed to take out the lows of late March we have managed to recoup some of that ground and Ultimately kind of while we hold above this red line here the charity moving average which comes to the play at 71 73 if you could hold above that It's likely we could see further ground be made and should you press on higher from here The first ready to keep them out for who this blue line here Which is the fifth and moving average and that comes into play at 7341 and if you go beyond that We could be looking at retesting become a psychology board and 7400 and then if you go beyond that we could be looking at retesting there at the April highs If you do have a size of break to the downside below the dirty moving average And we take out this yellow line here the one-day moving average which comes to the play In around the kind of 71 80 mark we could be looking heading back down forward this year We hear in around the lot the the late February lows have been around 70 40 Take a look now. What's going on over in Germany? It's a similar situation by the German market rally between late December and early May So he had a multi-month high here in May and since then we've come off the boiler bit for like as I said the China US China trade situation now We're looking at we could be in for another kind of you know eurozone Debt-scale in relation to Italy, but the markets are holding the back is holding up. Okay It's you know We have seen you know the lower low or could be you know the lower high Could be potentially looking for another move to the downside But while we would be hold above this this blue line here The fifth any moving average which comes into play at 11,976 while we hold above that It's like we could see the wider upward trend continue. I should be pressed around higher from here They could be looking at targeting the kind of 12,400 12,460 region up around here, which would be in around the early May high If you do have a size of break below the fifth any moving average keep an eye on this area here in around 11,823 we can see that ever assistance in In in mid-March and also after area to support a couple of occasions in in April and also in in mid-May So keep an eye for 11,823 I'll give the size of the break below that we could be looking heading back down towards the 11,600 mark Take a look at what's going on over in the US starting off with the S&P 500 So the S&P 500 keep in mind hit an all-time high here in late late April early March So the market, you know the wider upward trend is still very strong But you know as I said we have seen global equities move to the downside So the market pushed pushed lower here bounced off of 7,800 pushed higher here So we have the lower low lower high here, and we love to be a bit indecisive You know this could be the point where We look to retest 2,800 and I should have a size of break below that that would then be significant because The lows then we would take we would then have been taking off the most recent lows And we have a lower low a lower high and a lower low. So I keep an eye out for 2,800 if you do break below that and if you do have a break below that Support might be found from this red line here Which is the fifth that a moving average sorry 200 a moving average the red line is a turn to moving average and that comes to play in at 2,774 All to keep mind this trend line, which has been in place for quite some time It's is still it's double up keeping on keeping an eye on if you draw a lot from the lows of February 16 To the lows of November 16. You get this trend line along here On a few occasions the back end the last year I'd like to support it act as both support and resistance and you know in In 2019 and we could look at heading back down towards that area It's essentially coincides with the turn to moving average which which to my mind makes it even more Make it even more significant because if a couple of metrics of a couple of metrics Which been important in the past overlap it makes it more likely we could see that area being being an area of importance So we could look at heading back down towards that area In around the two thousand seven hundred and seventy four region But if the market manages to kind of hold above the kind of two thousand in remark I should press on higher from here. We could be looking at retesting the mid may high of in around two thousand eight hundred and ninety two And if you go beyond that we could be looking heading up towards the like up towards two thousand nine hundred and twenty And then beyond that look at retesting the old-time highs I'll take a look what's going on on the Dow Jones now It's a similar situation For the Dow Jones the Dow Jones didn't hit an old-time high a few months ago, but did manage to hit They didn't manage to hit Significant levels back in May But so back in back a neighbor rather at the market if you can see here similar situation or by the trend line from the lows of February February 2018 to the loads of March and April 2018 create this trend along here similar situation with with the S&P 500 for buy the market did manage to act as reasonably good. Okay Support and resistance level in 2019 And the market might effectively retreat a bit below upper The sentence effectively close At or at or above it In mid-March but in mid-May Nonetheless, why we hold above that line is likely we could see further gains on the Dow Jones But if the if the overall trend does turn negative support commitment to play in around that area Which should be in around which also coincides with dirty moving average in around 25,000 435 25,400 keep them out for that area If you do see a significant break below that I keep them out for the the lows of their very mid-March Which come keep so in around the kind of 25,000 225 if you break below that we could point to further losses That you know the upper to the train for the last few months the upper fairness is still in place But if you didn't you know you need to be more in order to be more confident that their wire trainers going to continue We would need to kind of take out this blue line here of the 50 movie average, which comes to the play at 26,060 and a movie on that could take us back up towards 26,400 and they could be looking at a towards the 26,700 region Take a look now. What's going on over in gold? So gold Since February has been a nice example of a downward trend the last series of lower lows and lower highs And essentially what gold remains below this area here in around 1300 1304 The kind of mid may high one remains below that It's likely we could see further pressure on the commodity and if you do manage to push on lower from here We could make you try hitting 12 is 66 and then if you go keep pressing lower from here We could like to try getting this region here in on the 1250. We can see that actually as a Resistance on a few occasions at the back of the last year. So it's possible. It might act as support in the near term If gold does manage to press on higher from here take out the kind of 1303 1304 metric mark here We could then be looking at our getting 1310 which would be the mid April high and then beyond that up towards 1324 the late March high Take a look now. What's going on on the oil market? starting off with brain crude The oil contracts have had similar similar ish moves for the last few months like with equities Oil has had a big rebound between December and April and May But since then we have had a bit of a bit of a shake-up our concerns over future demand prospects because of the US China trade situation is going to dampen them Has that encouraged some traders to sell oil, but we have seen the old mark I've actually recouped some of its losses in recent sessions. So We what's what's opposed well for oil or for Brent crude at least is it's back above this red line here, which is a Trinity moving average and that comes into play just above 69 dollars a barrel So if you can hold above the Trinity moving average, it's likely we could see The wider upper training continue and should you press on higher from here We could be looking at it towards the 72 mark and then if you go beyond that They kind of the mid the mid March high of in around 73 spot 60 and then if you go beyond that We could be looking at retesting the April highs If you do manage to have a slice of break back below the Trinity moving average Then keep an eye out for this this yellow line here the water that we have the average in which comes to play at 67 spot 35 we can see here Back in the start of the year the metric did much act as important as a few occasions And if the metric act as important a few occasions in the past it makes it more likely it will do so in the future Now turning our attention to WTI It's a reasonably similar situation on WTI Providing we've seen a fairly decent move higher from late December up until April May But of course it got caught up with the concerns about future demand because of the US China trade spat was what's What marks out WTI? As the weaker of the two oil contracts versus Brent crude is that WTI is still firmly below this red line here It's 200 moving average which comes into play just above at $60 a barrel So we're currently on around 59 spot 07 So we're circling below the 20 moving average and while we remain below that metric It's likely we could see further losses Notice how on the water day moving average which previous act as support in February March of this year It's holding it's just about it's trying to blow that in a few occasions, but it's managed to hold above it So it seems to me that the market is in a bit of a limbo position where by it's below the turning moving average So the it's a bit of a negative outlook But if you can hold above the 100 it still has a chance of getting back above the turning moving average I'm pressing on our so the wider trend of the last few months has been at the upside Brent is above it's nerdy moving average. So that's that that's positive for the overall oil market if if WTI can retake It's turning moving average in around in about $60 a barrel We could be looking at retesting the this region here in around 63 6375 Because of the bit the kind of mid-may highs If you do manage to get a size of break below this this area here take out the most recent lows Just north of kind of in around the in around the In around the 57 20 mark if you do have a decent break below that We could be looking at targeting this year you here in around 55 spot 45 But actually it's both resistance and also a support not too long ago So it makes it more likely it will do so in the future Take a look now at the euro versus the US dollar So euro dollar has been in a nice downward trend the last few months way series of lower lows and lower highs Yes, I can clearly see the highs of March managed to go up the side of the highs of The highs of March managed to take up the highs of February, but you know, it's still a classic example Oh, it's still it's almost a perfect example of a downward trend But we can see here stood up the bat at this blue line here the fifth removing average Which comes into play in around 112 spot 27? We can see That's been acting as resistance after a few occasions the last few months So probably hold below that metric is likely we could see further losses potentially down or head back down towards the racing lows of one spot 1110 actually should move below that Psychological porn one spot 10 could then come into play If you can manage to press on higher from here We could be looking at tackling this area here the other mid mid April highs of in at one spot 13 22 And if you go beyond that you can look at it towards again at one 14 mark And then they kind of in around that one spot 14 45 one spot 14 48 in a front mid March And lastly take a look at the pound versus the US dollar So we quite a since early March we've had a fairly aggressive negative move on the pound versus the US dollar We do massive series of daily losses along here that our pressure on trees may to announce a recognition At the back in the last week we finally got that so we've seen a bit of a release rally But the pressure is still a very much to the downside on the British pound especially in the wake of the success of the Brexit Party in the EU elections because There might be some of them the Tory party You might suggest that given how popular well the Brexit Party did in the EU elections and their policy is for A no D is for a no deal Brexit. We might see some individuals Looked you can test the Tory leadership on the on a ticket of a no deal of Brexit and should the markets A no-deal mark a no-deal Brexit is something that the French markers we can would fear the most essentially if the Brexit Is this kind of soft as possible? It's likely we could see a benefit to the palm But if it looks like the UK is It looks like the next deal of the Tory party is going to be very much in favor of Brexit possibly even favor of a no-deal Brexit We could see further pressure on the British pound So the trend has been to the downside for the last few months if you look at take off the most recent lows I mean if you look at if you look at if continue to press on lower from here, and we look at start taking off at one spot 26 mark It could take us backers down to this area here in a one spot 24 76 And he moves to the upside in the power versus US dollar could run for distance in around the kind of one spot 28 Region and a movie on that could bring the journey moving average into play in around again at one spot 29 55 area Just want to show a quick run through of the week ahead if you go to our website cmcmarkets.com Under newt and analysis you will find the week ahead section And list off all the major market economic and corporate stories of the week so Wednesday tomorrow, we have the bank of Canada industry decision On Wednesday, we have first quarter numbers from apocambian Fitch over the US. Also. We have Dick sporting good q1 figures On Thursday, we have US GDP first quarter On Thursday, we have full your full your numbers from the British company panel group We also have your first half figures from the Daily Mail and general top general trust Company here in the UK Thursday, we have first quarter figures from Dell technologies and we also first quarter results from Matthew gap and on Friday We have Chinese manufacturing and Chinese non-manufacturing If you have any comments to make on this video or any of the other videos We've made here at CMC markets, please feel free to leave a view on your views and that's all for me this week. Thank you very much