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Dow Jones and FTSE 100 Forecast for the Week Ahead

Dow Jones and FTSE 100 Forecast for the Week Ahead

2020-03-01 12:00:00
Justin McQueen, Analyst
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Equity Analysis and News

  • Dow Jones | Catastrophic Losses as Coronavirus Hits
  • FTSE 100 | UK and EU to Lock Horns in Brexit Talks
Stock Performance Chart

Source: Thomson Reuters, DailyFX

Dow Jones | Catastrophic Losses as Coronavirus Hits

Catastrophic losses across global equity markets as the coronavirus hits back with a soaring number of cases outside of China. US equities saw its 4th largest weekly drop since 1927, falling over 13% while US treasury yields crashed to a record low (10yr yielding 1.16% at time of writing) as markets aggressive price in Fed easing (Figure 1). The question that is on investors minds is what the negative impact will be and for how long it will last, however, the authorities yet to sufficiently contain the spread of the virus, it will be a while until this question is answered. Another focal point for markets will be the potential response from central bankers, However, despite the large repricing of near term easing from the Fed, rate setters have yet to signal that such action is needed.

Figure 1. Aggressive Market Pricing for Fed Stimulus

Rate cut expectations

Source: Refinitiv

The Chinese Manufacturing PMI will provide the first notable signs of the impact that the coronavirus has had. Although, what the number will print is anyone’s guess given the large spread of forecaster expectations. At the back end of the week, the latest NFP report will be released, however, given the current narrative that has dictated risk sentiment, the data is not expected to have a notable impact.

Poll summary

Source: Refinitiv

Dow Jones Price Chart: Weekly Time Frame

Dow Jones Price Chart

Source: IG Charts

FTSE 100 | UK and EU to Lock Horns in Brexit Talks

Aside from the fears pertaining to the spread of the coronavirus, UK assets will be increasingly focused on Brexit once again. Both the UK and EU have announced their mandates for negotiations with trade talks due to commence from next week. However, given the notable differences between the two parties, talks are expected to get off to a difficult start and thus the FTSE 100 may continue to struggle.

UK Stance

EU Stance

No aligment over regulation

Level playing field

No extension of transition period

Willing to have extension depending on the UK's fullfilment of other obligations

Control over fisheries

Current equal access to fishing waters should be maintained

Control over immigration

No free movement of goods and services without the free movement of people

Brexit Roadmap

FTSE 100 Price Chart: Daily Time Frame

Dow Jones and FTSE 100 Forecast for the Week Ahead

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--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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