Nick Batsford opened the Tip TV Finance Show alongside Zak Mir, technical analyst for ShareProphets.com, and Mike Ingram, strategist for BGC Partners, to discuss the plan for UK rates, whether Japan is damaging its economy, how important is China, as well as looks at the S&P, the DAX and the FTSE 100.
Expectations of UK rates pushed back
Ingram noted how the UK rate hike has been pushed back further away than ever, believed to be around November 2016. We have had the hawkish sounds from the Bank of England, but Ingram outlined how the markets are no longer listening because forward guidance has failed to inform anyone accurately on the timing of the UK rate hike, and has damaged markets.
Japan’s shouldn’t decrease corporate taxes further
Ingram continued onto Japan, which has seen a Q2 contraction in growth, meanwhile, the devaluation in the Yen over the last 2.5 years has resulted in the Nikkei 225 and corporations benefitting. However, Ingram noted how these firms haven’t recycled the money, and have avoided re-investing or increasing wages, they have just sat on their money which hasn’t helped Japan. He believed that Japan have followed the wrong policy for the economy, and should have increased corporation tax and decreased income tax and VAT, and Ingram believes that this is down to panic.
Is China important?
Ingram highlighted how there is scope in China for some fiscal easing, as the IMF had talked about. At the moment Ingram noted how the Chinese government is imposing spending limits at local government level, which in reality is doing very little. He finished this section by commenting on the amount of rubbish surrounding China, and concluded we need to decide whether China is important or not.
S&P 500 and DAX sell to strength, FTSE 100 could see 6408
Mir noted the question over consolidation surrounding the S&P 500, whether it would see an upward or downward move. He highlighted that it has been all over the place, but selling to the 1980 level seems like the best strategy.
In terms of the DAX, Mir commented how it is up at the key resistance level of 10500, but that it shouldn’t go beyond this level, and thus sell to strength notes Mir.
The FTSE 100 has reached the 6260 resistance, and Mir outlined how a close above this resistance could see the FTSE back to the 6408 level.