UK stocks are opening higher today following substantial gains in the US overnight, after US Federal Reserve Chairman hinted interest rate rises could slow. The FTSE 100 index closed down 12 points at 7,004 yesterday. After the market close, the Bank of England's annual stress tests showed UK banks are strong enough to withstand a disorderly Brexit and the country's financial system is resilient to the wide range of risks it could face. However, the BOE warned Britain would be tipped into a recession worse than the financial crisis in the event of a no-deal disorderly Brexit. Britain's GDP could fall by 8%, according to a worst case scenario modeled by the Bank. The unemployment rate would rise to 7.5%, inflation would surge to 6.5% while interest rates would rocket as high as 5.5%. Parliament is set to vote on May's Brexit deal on December 11. Looking ahead, the UK corporate calendar today has full-year results from travel agent Thomas Cook. Nothing scheduled on the UK economic calendar.
From a technical standpoint, nothing happened yesterday as prices remained stuck in the same tight trading range. This morning however, the index is set to open 40 points higher at 7050 thus crossing a resistance level at 7040. However, it yet remains to be seen if the index can close above the 7040 resistance which is also the 20-day moving average. So far, every time the index spikes up, the bears take back control ending the day lower, as the short and medium term trends are still clearly bearish.
Support: 6970 / 6855
Resistance: 7040 / 7115