London’s blue-chip index posted the largest percentage decline amongst European indices as it dropped by 3.23% on Wednesday. Global growth concerns were the catalyst behind the index’s downturn as dire global manufacturing data tainted the global economy outlook while yesterday’s weaker than expected US ADP non-farm employment data added further pressure. Moreover, the US announced its intentions impose tariffs on the EU thereby adding to market’s agenda of trade concerns. Meanwhile, Brexit worries linger as PM Johnson prepared a new offer on Brexit which he has yet to propose to the EU today. This will be another test to market sentiment while global services PMI data and particularly US ISM-non manufacturing PMI figure alongside factors orders data is expected to provide direction on the day.
The FTSE lost 237 points to end at 7122 on Wednesday. The price plunged below the 7350 level and broke through the 200-day MA at 7235 before reaching a low of 7120. The 4H RSI reading has reached the oversold territory suggesting that we may see a short-term rebound that would be confirmed with a sustained move above 7150 after which the FTSE would target the higher levels at 7190 and the resistance provided by the 200-day MA. Failure to trade above 7150 will maintain bearish pressure with a break through 7120 required to drive the FTSE to the lower support levels at 7080, 7040 and the critical psychological support at 7000.