The FTSE 100 is moving up easily but the S&P 500 is struggling to move up. The US index was up early on Friday but ended down after news the US government is considering delisting Chinese companies from US stock exchanges. This is another form of escalating the trade war between the US and China and you will notice that the S&P was not far away from its all-time high when the news came.
I have been concerned the Trump administration would escalate the trade war, they tend to do it when the S&P is near the all time high. Nevertheless trade talks between the two countries are expected to be held on October 10-11 and this is what matters to investors. Markets are up this morning.
But trade talks usually end with no progress, the pattern is a rally into the meetings followed by a decline as trade talks disappoint. Meanwhile the US economy is still losing momentum, the same thing is happening in China, the EU and the UK. While I expect a final rally near 7500 in the FTSE I am less certain the S&P will rally, the S&P is weak. This conflict between the two markets is not ideal, they should move in the same direction.
The FTSE has retraced nearly 62% of the July-August decline. The area above 7457 is resistance. The week starts with optimism, but it could end with pessimism. Stock markets are tired, I see a potential decline starting this week.