Nick Batsford, CEO of Tip TV, was joined by Zak Mir, technical analyst for ShareProphets.com, and Keith Bowman, equity analyst for Hargreaves Lansdown (LONDON:HRGV), when he opened the Tip TV Finance Show on the 25th of September 2015 to discuss the outcome of Yellen’s speech yesterday, an outlook on a variety of Indices, the FX Street analysis, and a look at the week ahead.
Markets rallied due to more clarity following Yellen’s speech
Bowman highlighted how Yellen has left her options open after her speech yesterday, but it still pleased the markets which rallied this morning. He continued that we should still wait and see, but he has more confidence in a 2015 interest rate hike. Mir added that Yellen thinks the US will reach it’s inflation target of 2%, and he believed that her discussion on inflation provided the markets with more clarity and thus caused the rally than her view on a Fed rate hike did. He emphasised than Yellen is a dove, and that he would be surprised if US interest rates rose in 2015.
Outlook on the Indices
Batsford looked at the S&P 500, with respective resistance at 2000, and he noted that recovery above 2000 is unlikely but would signal a relieving rally. Breach of the support at 1870 would confirm the primary downtrend.
The FTSE 100 is in a similar position according to Batsford, with breach of support at 6000 confirming a primary downtrend. Mir added that prices look comfortable around the 6000 level, and he urged that this has to be the level to buy into. Whilst Bowman concluded that 6000 as a big round number isn’t significant on the FTSE.
In terms of the Dow Jones Industrial Average, Batsford commented that it is testing support at 16000.
He continued to Germany’s DAX, which retreated below support at 10000.
Batsford outlined that Hong Kong’s Hang Seng bear rally failed and the index is again testing support at 21000.
When concerning the Shanghai Composite, he highlighted that the index continues to test (government backed) support at 3000, with recovery above 3500 most unlikely. A breach of 3000 would warn of a sharp sell-off.
The CBOE Volatility Index is holding above 20, indicating elevated market risk, noted Batsford.
Batsford finished on Japan’s Nikkei 225, and commented that it is having difficulty breaking resistance at 19000.
Gold could spike on downward revision on US Q2 GDP
Batsford highlighted FX Street, who believe that the US GDP release today may be a non-event, if the number is in line with the estimate of 3.7%. However, a significant downward revision of the US Q2 GDP could lead to serious risk aversion, whilst Gold is poised for a rally in case of a weaker number. Bowman concluded that non-farm payroll figures in the US will be more significant next week than the US GDP release today.
Core consumer prices turned negative
Batsford commented on Nicole Elliott, who outlined that for the first time in 3 years core consumer prices in Japan turned negative. In the year to August 2015 prices, excluding those of fresh food, but including energy dropped 0.1%, while in the greater Tokyo area they fell 0.2% Y/Y to September. Mir added that there is deflation in Japan, and has been a similar thing for the last 25 years.