FTSE's upside challenged ahead of meaningful vote
- UK shares were once again in retreat, his time on the release of the disappointing Chinese trade data ahead what is expected to be a roller coaster of a week due to Tuesday's Commons vote on UK Prime Ministers Theresa May's Brexit deal.
The FTSE 100 dropped 0.91% or 63.16 points to 6,855.02. another factor weighing on the FTSE was the value of the pound, rising to the highest level against the greenback in several weeks following PM May's warning in her speech today at a factory in Stoke-on-Trent that Brexit could be thrown out altogether if MPs vote against her deal on Tuesday. However, an additional uncertainty is whether Labour leader Jeremy Corbyn, as pledged, will challenge May's leadership and push for a general election if the Commons vote turns her deal down.
Elsewhere, the imports in China's trade data dropped 7.6% on the year in December vs 3% expected, while exports were down 4.4% vs 5.4% expected. The data also showed China's trade surplus with the US was hitting a record high last year, to the largest since records began in 2006 which is weighing on sentiment.
On the corporate news, Paddy Power ws hit by a downgrade to 'equalweight' at Barclays and Next was hit by a downgrade to 'underperform' at Credit Suisse. Countryside Properties was lower due to JPMorgan cutting the stock to 'underweight'. As far as the performers, Royal Bank of Scotland Group (RBS) 232.50p 3.01%, Land Securities Group (LAND) 850.40p 2.06% and Ocado Group (OCDO) 878.00p 1.95% were the top three.
The FTSE has lost its upside bias meeting a heavy rejection by the bears guarding R1 located at 6998, the last stop to the key 38.2% Fibo retracement target of the May 2018 decline, located at 7041. A rally from there will open the runway to the 50% Fibo of the same range that is then located at 0.7204. Daily MACD is turning less negative while RSI still has room to go on the upside.