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FTSE notches a positive cose in strong turnaround, although remains i bearish territory

  • London stocks closed on the front foot on Wednesday, reversing earlier losses as crude oil futures rallied on supportive news out of Saudi and the States. 
  • The disappoints in China's manufacturing sector initially weighed on global stock prices and took the FTSE for a trip tot he downside with the price reaching as low as 6,599.48. However, the index reversed spectacularly and ended 0.01% higher at 6,734.23.

Along with weakness in the pound which helped boost the index, a Bloomberg also supported buying on the reports that Saudi had indeed curtailed its exports of oil in December, sending oil prices higher on expectations of production cuts that have started to kick in this year by Organization of the Petroleum Exporting Countries and other major oil producers.

However, this alone is not enouch to sustain such a rally. Investors are still reluctant to put both feet into the water considering concerns over global economic growth, a US government shutdown and various political risks in European markets such as Brexit and the Italian budget which had made for relentless selling over the past few weeks. 

On data, the IHS Markit/CIPS manufacturing purchasing managers' index rose to a six-month high of 54.2 in December from 53.6 the month before, well above the 52.5 the market expected. However, the concerns that some of the positive picture generated by the data was down to the stockpiling of goods in anticipation of a hard Brexit and this weighed on sterling.

Best and worst

The energy sector got a boost on the rally in oil with BP, Shell, Premier Oil and Tullow Oil all higher. On the other hand, miners were hit on the Chinese manufacturing data with Glencore, Antofagasta, Anglo American and BHP among the worst performers on the FTSE 100.

Top three performers

  • Next (NXT) 4,177.00p 4.66%
  • Fresnillo (FRES) 888.00p 3.26%
  • Paddy Power Betfair (PPB) 6,580.00p 2.81%

Worst three performers

  • Glencore (GLEN) 282.50p -3.04%
  • Johnson Matthey (JMAT) 2,723.00p -2.72%
  • Informa (INF) 614.20p -2.54%

FTSE levels

The index has stabilized around the pivot is submerged below the 50% Fibo of the 2016 bull trend with a low, (6697). Bears remain in charge broadly speaking. The next target is the 61.8% fibo of 6413 and the 76.4% located at 6061. However, there is a monthly doji and bulls have shown commitment on the daily sticks. On the upside, an immediate target sits at 6812 as R1, R2 6900 and R3 is at 7038.

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