Friday, November 1, 2019

FTSE100

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Fundamental Highlights

The FTSE which is constituted of multinational companies tends to benefit from a lower domestic currency and thus declined by 1.12% on Thursday as a rising pound alongside disappointing Chinese manufacturing data weighed on the export-oriented index. Moreover, Royal Dutch Shell and Lloyds Banking dragged the blue-chip index lower as they published disappointing corporate earnings results and prompted a decline in their respective share prices. Meanwhile news on the global trade front dented sentiment as China raised doubts over the potentiality of a long-term trade deal with the US due to President Trump’s unpredictability. In the UK, the prospect of a no-deal Brexit diminishes while the likelihood of a general election increases. Earlier today, China published its Caixin manufacturing PMI which came in above expectations which may not suffice in offsetting yesterday’s weaker than expected official manufacturing PMI figure. Expect a strong pound to limit FTSE’s upside potential and better than expected US employment data to provide support on the day.

Technical Analysis

The FTSE closed 82 points lower to end at 7248 on Thursday. The index traded below its previous closing price and dropped below the 7280 level to meet the support zone at 7250/7245. It appears that a higher low may be in the formation on October’s ascending trend line. The price would have to hold above the 7240 support in order to maintain the uptrend as a decline below this level would signal further weakness and target the lower support at 7220 followed by 7190. Look for a sustained move above the 200-day MA around 7280 to indicate buying pressure and lead to a re-test of the resistance at 7340.

Support: 7240/7220
Resistance: 7280 /7340

Chart (H4)
FTSE100