US-China headlines triggered a decline in global equities yesterday with the Footsie recording the largest percentage loss amongst European indices. A US trade official reportedly confirmed that President Trump’s tariff threats would be imposed on China on Friday, leaving markets concerned over the global economic outlook as a trade deal seems far from reach. Alongside the unsettled trade dispute between the US and China, The outlook on the Eurozone’s economy remains bleak as growth forecasts point to subdued growth in the UK given Brexit uncertainty while the region’s largest economy, Germany, is expected to grow at rate of 0.5%. Concerns over trade relations will dominate market sentiment as traders monitor US-China headlines to determine any change on the global trade front.
The Footsie Index extended losses below the support zone of 7350 and recorded a decline of 1.63% to end at 7260. The dramatic pullback is leading price lower towards the support zone at 7230/7240 after which bearish momentum may accelerate the decline towards the 200-day MA at 7200. Meanwhile, the RSI reading has reached the oversold territory and will eventually lead price to turn higher with initial resistance at 7300 followed by 7340, before extending losses on the downtrend.
Support: 7240/ 7200
Resistance: 7300/ 7340