The FTSE declined by 1.42% on Wednesday as the global growth outlook deteriorates after the German economy, just as the UK, showed contraction in the second quarter while China’s industrial production figure reached a record low. The disappointing data inspired risk averse flows and led to the inversion of both the UK and US yield curve, a signal of impending economic doom. Today, the UK releases retail sales data which would provide insight into the nation’s consumer spending. The US will also publish retail sales and manufacturing data which may influence price action on the FTSE. While economic data will reveal more of the bleak global economic outlook, expect trade and geopolitical headlines to influence market sentiment.
The FTSE lost 103 points to end at 7147 on Wednesday. The price failed to surpass the resistance zone of 7280/7300 and turned lower to reach a low of 7112. The 200-day MA at 7190 should determine near-term direction on the FTSE as a sustained move below this level would target the support at 7080 should price trade below yesterday’s low. A trade above 7190 would lead price to test resistance at 7230. It is worth looking at the RSI reading as it nears the oversold territory yet has failed to form a lower low to correspond with price action suggesting that we may see price rebound in the short-term.