The FTSE ended 0.97% higher on Monday with news of a US-China trade truce at the G-20 summit catalyzing the climb and uplifting market sentiment. Just days after the US reached an agreement to resume trade negotiations with China, it proposes to levy tariffs on the EU and the news may weigh on sentiment as it calls for caution and could potentially reverse some of the gains prompted by US-China trade optimism. However, the FTSE’s oil majors may find support from rising oil prices on the news that OPEC would extend supply cuts and on a declining pound which benefits the internationally exposed FTSE. Markets will monitor trade headlines to determine the dominating sentiment amidst optimism over US-China trade talks and risks posed by a US-EU trade conflict.
The FTSE broke out of the trend line resistance and overcome the key resistance level at 7470 to reach a peak of 7530 before ending at 7497. Look for a sustained move above 7500 to maintain bullish momentum with a break above 7530 required to drive the FTSE towards the higher resistance at 7560. Meanwhile, a move below 7470 would indicate selling pressure and suggests the FTSE may be filling the opening gap.