UK shares creep and close higher again in recovery rally
- The FTSE index extended the rally on Wednesday amid optimism about the latest round of US-China trade talks and hopes that moves in Westminster have lowered the chance of a no-deal Brexit.
- The index climbed by 0.66% or 45.03 points at 6,906.63 and is now positioned the best levels in a month.
On the political front, UK MPs are in effect gaining control of the timetable in the event that the vote on her proposal, on 15 January, goes against her. The PM's defeat means that there are now a range of possible outcomes for negotiations with Brussels from a 'disorderly' Brexit to a second referendum. If the PM's Brexit bill is rejected on Tuesday, Parliament will have to provide information on the next steps within three sitting days (likely to be 21 January).
Best and worst performers
In corporate news, Vodafone was hit by a note from Macquarie, which said the company's structural challenges remain significant. Sainsbury's reversed earlier losses to trade up even as it reported a fall in revenues over the past 15 weeks due to a slump in general merchandise sales, which the grocer blamed on cautious customer spending and a decision to reduce Black Friday promotions. Housebuilders were the standout gainers as Taylor Wimpey rallied after saying it would report 2018 full year results in line with expectations as the housing market remained stable despite uncertainties caused by Brexit. In a trading statement for the year to 31 December 2018, it said total home completions increased by 3% to 14,947, including joint ventures.
The top three performers of the index were Taylor Wimpey (TW.) 149.10p 6.20%, ITV (ITV) 137.85p 4.91% andWood Group (John) (WG.) 592.80p 4.55%. The worst three performers were Royal Bank of Scotland Group (RBS) 220.90p -2.17%, Vodafone Group (VOD) 152.80p -1.80% and Hargreaves Lansdown (HL.) 1,884.50p -1.13%.
The index has added to the consecutive daily gains above the 23.6% retracement Fibo of the early summer 2018 decline and has penetrated the 50-D SMA at 6909. The 7000 psychological level comes into play now. The 38.2% Fibo at 7041 guards a run to the 50% Fibo of the same range that is then located at 0.7204. Daily MACD is higher again while RSI still has room to go on the upside.
Support levels: 6867 6831 6767
Resistance levels: 6932 6967 7032