FTSE 100 closes 1.64% higher to 6,831.97 on turn-around Tuesday
- The FTSE 100 index was closing on a preliminary basis 1.64% higher to 6,831.97 on Tuesday following another beat in UK wages growth, optimism surrounding Sino/US trade talks and speculation that a hard Brexit can be avoided after all.
The more positive tone overnight came with officials from Washington and Beijing reportedly kicking-off trade talks once again. Bloomberg reporting towards noon that China was moving to reduce the tariffs which it had recently levied on imports of cars. President Donald Trump tweeted Tuesday that the U.S. was engaged in “very productive conversations” with China. A fresh round of trade talks kicked off late Monday via a phone call between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, according to The Wall Street Journal.
Brexit remains a sticking point
In the background meanwhile, there was some optimism on the likelihood that a 'hard Brexit' could finally be avoided, despite the political turbulence that likely still lay ahead. However, Prime Minister Theresa May was visiting Amsterdam and Berlin to try and garner support for her plans from the European Union, and it appears that she is going to have a tough time renegotiating a more favourable deal for the UK. Merkel told May deal cannot be renegotiated. There were also some conflicting headlines in recent trade approaching the close that Brexit Lawmakers in UK PM May's party had sent 48 letters enough to trigger a no-confidence vote in her leadership. Very soon after the headlines from Sky News, there were rumours that there were not enough letters.
UK wages beat expectations again
On the data front, the latest UK jobs report looked a little more encouraging. Wage growth once again beat expectations. At 3.3% year-on-year, regular pay is rising at the fastest pace since the crisis.
Best and worst
The top three performers were, ANGLO AMERICAN PLC AAL:LN + 5.74% MELROSE INDUSTRIES PLC MRO:LN + 5.33% and WOOD GROUP (JOHN) PLC WG/:LN + 5.25%. The worst performers were, STANDARD LIFE ABERDEEN PLC SLA:LN -1.66%, RANDGOLD RESOURCES LTD RRS:LN -1.57% and LLOYDS BANKING GROUP PLC LLOY:LN -0.87%
- Support levels: 6713 6659 6607
- Resistance levels: 6871 6924 7000
The series of daily losses are being corrected with the index now back up to test the pivot line of 6808 with a high of 6859 scored on the day. However, there is strong resistance here and bulls are losing control which may revert attention back to the downside on a failure below S1 located at 6713. The Dec 2016 lows at 6680 are a key downside target. The 2018 range 23.6% level is located at 7100. The 38.2% Fibo of 2018's range at 7262 is the critical objective thereafter.