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FTSE 100 hit a two-year Ebenezer Scrooge closing low

  • UK stocks in London were suffering their worst close in more than two years as global growth concerns, Sino-US relations and Brexit woes continued to weigh on risk sentiment into the Christmas break making for a Bah-humbug Xmas Eve close.
  • The FTSE 100 closed down 0.5% at 6,685.99 - its lowest finish since September 2016 - amid holiday-thinned volumes.

£76bn has now been wiped off the FTSE 100 in December alone. Investors have suffered one of their worst Decembers ever. Across the pond, the DJIA lost 12% for the month as of last Friday’s close and its bleeding today has it on track for its worst December since 1932 which doesn't look good for the start of the New Year, 

US Treasury Secretary Mnuchin did the damage to European and US markets when he said he had convened a "Plunge Protection Team" in an attempt to calm investors' nerves following the recent market selloff. 

The "Plunge Protection Team" is a group that includes:

  • The Secretary of the Treasury, or his or her designee (as Chairperson of the Working Group);
  • The Chairperson of the Board of Governors of the Federal Reserve System, or his or her designee;
  • The Chairperson of the Securities and Exchange Commission, or his or her designee; and
  • The Chairperson of the Commodity Futures Trading Commission, or his or her designee.
  • The group was created following the stock market crash of October 1987 and met in 2009 in the latter stages of the financial crisis.

Mnuchin said the chiefs of the country's biggest banks had confirmed to him that they had ample liquidity. However, the fact that he has called the Plunge Protection Team together is alarming and the markets fear that there is something to worry about, at the same time that there have been rumours that Trump is in the verge of firing Fed' Chairman Powell, or at least, exploring a means to do so. Meanwhile, when the UK government reconvenes in Jan, Brexit will be the next major risk for UK shares which could well be the straw that breaks the camel's back.

Best and worst

Unsurprisingly, UK corporate news was scarce, however, the best and worst start with the risers which were Spirax-Sarco Engineering (SPX) 6,085.00p 3.14%, then Micro Focus International (MCRO) 1,385.50p 2.97% and Ashtead Group (AHT) 1,643.00p 2.59% came in third. The worst performers of the 100 were United Utilities Group (UU.) 728.80p -5.25%, then 3i Group (III) 756.20p -4.23% and London Stock Exchange Group (LSE) 3,907.00p -3.93%. 

As for European shares, there was a severe lack of festivities there also due to the US government shutdown and global growth concerns. The Stoxx 600 index finished in the red as European markets closed early, which is probably just as well, giving investors some time off from the miserable month so far. Trading was thinner due to both Frankfurt and Milan out for Chrismas Eve. European shares have fallen almost 14% so far this year and set to record their worst performance since the 2008 financial crash caused by the banks.

FTSE technicals

The index has broken below the 50% Fibo of the 2016 bull trend with a low, (6602), just shy of Monthly S1 located at 6558. 61.8% fibo of 6414 and the 76.4% located at 6064. On the upside, an immediate target sits at the recent highs through R3 at 6900.

Support levels: 6590  6539 6459

Resistance levels: 6670 6721 6801

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