FTSE 100 index closed marginally higher on weaker sterling/Chinese whispers, ahead of key Brexit vote
- Investors were awaiting the meaningful vote outcome on Tuesday, which left the pound out to dry dropping heavily from recent gains and enabled the FTSE to drift higher, underpinned by a boost in sentiment due to China's announcement of their latest economic stimulus plans.
- The FTSE 100 ended up exactly 40 points or 0.6% at 6,895.02 following a drop in the pound almost 1% vs the greenback.
China's plans to cut taxes on a larger scale sent risk sentiment higher on Tuesday as plans to help support a slowing economy and boost spending while providing financing for private and small businesses was seen as a step in the right direction. However, as analysts at TD Securities argued, "we will need to see concrete signs of action before markets are convinced, but the comments are in the right direction," adding, "in particular, they are focusing on areas of pressure such as autos, weakness in private companies as well as highlighting prospects for major and broad-based tax cuts."
- GBP/USD: Market positioning for 'big majority' Brexit-vote defeat, and that is where the money is for Bulls on alternative outcomes
On the optimism, mining stocks were one of the key forces of the bullish moves in the index and oil companies were also supportive with crude prices picking up again. Tech companies, such as Ocado, Micro Focus and Sage also helped to lead the FTSE 100 higher.
- WTI: Bulls stepping in on Chinese whispers, 23.6% fibo retracement supports, for now
Best and worst
The top three performers were Rolls-Royce Holdings (RR.) 886.00p 2.62%, 3i Group (III) 835.80p 2.55% and Ocado Group (OCDO) 896.00p 2.05%. The worst three of the index were, GVC Holdings (GVC) 675.50p -2.81%, Barratt Developments (BDEV) 498.50p -1.83% and International Consolidated Airlines Group SA (CDI) (IAG) 595.20p -1.52%.
- Support levels: 6870 6833 6803
- Resistance levels: 6938 6967 7041
The FTSE had lost its upside bias meeting a heavy rejection by the bears guarding R1 located at 6998 on Monday, but managed to get through there for a test of the next pivot pint along, R2, located at 6938. Bulls need to get 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 remains less negative while RSI still has room to go on the upside.