UK FTSE 100 (.FTSE) falls for the first time this week by 1.75 per cent to 6,696 in the wake of the collapse of FlyBe
The coronavirus outbreak is set to push the UK economy to the brink of recession in the coming months, Goldman Sachs has warned.
In it’s most recent forecast the investment bank said the country’s output is set to contract by 0.2 per cent in the second quarter, from January to March.
It would be the second consecutive quarter of zero growth, meaning the economy would be plunged into a recession.
‘The UK is highly exposed to global activity (which we expect to contract in the first quarter), tourism exports are significant and the virus is spreading steadily within the UK,’ a note from the bank’s economists said.
It comes as the FTSE 100 fell for the first time this week on Thursday in the wake of the collapse of FlyBe and continued concerns over a global economic slowdown in the wake of the coronavirus epidemic.
Britain’s blue-chip index opened slightly up, but quickly reversed gains and fell by 1.75 per cent, to 6696 points.
The UK’s stock markets had rebounded since Monday following their worst week since the 2008 financial crisis, after coronavirus panic wiped more than £251billion off the value of Britain’s biggest companies.
Signs of economic damage continues to pile up, however, with airline Flybe a high profile casualty on Thursday as it shut operations just a month after a publicly-sanctioned rescue.
Bank Standard Chartered, housebuilder Persimmon, and miners BHP Group and Rio Tinto , which were all trading without dividend entitlement, also dropped between 4.3 per cent and 5.1 per cent.
A surprise interest rate cut by the U.S. Federal Reserve on Tuesday pumped yet more money into financial institutions but it also added to a growing sense of panic among investors coddled by a decade of constant stock market gains.
The IMF now predicts that global GDP could see its slowest growth since 2008-2009 this year and Deutsche Bank analysts on Thursday cut their forecast for British economic growth in 2020 to just 0.5 per cent.
Deutsche’s economists outlined a range of expected official responses to the outbreak, including two cuts in interest rates by the Bank of England by May.
The market’s chief fear index was up 9 per cent at 34.91 on Thursday.
‘Markets might want to push for another Fed rate cut,’ Tavira’s Temperton said. ‘The European Central Bank, on the other hand, doesn’t have a lot of room. Once volatility markets are trading in the mid-30’s, things become very speculative.’
Miners, airlines and luxury goods makers were hit hard last week as the virus spread deeper in Europe and the United States and crippled supply chains and travel demand.
Shares in British Airways-owner IAG fell 1.9 per cent, while EasyJet was flat.
The mining index declined 4.2 per cent, also pressured by a strong pound.
UK outsourcer Capita Plc sank as much as 15% on signs its restructuring drive would require more capital.
The main European equity benchmark reversed early gains to trade down 0.8%.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 7,213.00.
The projected upper bound is: 6,940.76.
The projected lower bound is: 6,453.39.
The projected closing price is: 6,697.07.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 55.5791. This is not an overbought or oversold reading. The last signal was a buy 2 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.91. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 1 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -73. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 12 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -100.350 at 6,715.240. Volume was 14% above average (neutral) and Bollinger Bands were 231% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 6,890.20 7,397.11 7,349.25
Volatility: 36 22 17
Volume: 1,209,421,312 714,383,616 734,595,904
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE 100 INDEX is currently 8.6% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .FTSE at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .FTSE and have had this outlook for the last 27 periods.
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