UK FTSE 100 (.FTSE) hit by sell-off as China virus spreads to markets
The FTSE 100 suffered a widespread sell-off as markets were unnerved by the spread of a new deadly virus in China.
The UK’s main market followed Asian markets downward, shedding 1.2%, or 93 points, to trade near a two-week low at 7,558 after Chinese authorities reported a fourth death from the coronavirus, which is already being compared to the 2002 outbreak of severe acute respiratory syndrome (Sars).
Just four blue chips managed to eke out gains this morning, with Easyjet (EZJ) up 4.4%, or 64p, at £15.14 after a strong quarter and the announcement that first half losses would be narrower than last year’s £275 million. B&Q owner Kingfisher (KGF), insurer Legal & General (LGEN), and bookmaker Flutter (FLTR) also managed to eke out gains.
The Sars outbreak, which infected thousands and caused the death of hundreds, hit Chinese economic growth by up to 1%.
Neil Wilson, Markets.com analyst, said if there was a repeat of the Sars scenario then the International Monetary Fund’s latest forecasts ‘would not stand up, and we’d see a sharp contraction in many leading indicators of the global economy’.
Back on home territory, the pound crept higher against the dollar to trade at $1.304 after the Office for National Statistics reported jobs growth at its strongest level in nearly a year in the three months to November. But wage growth remained at its lowest level since September 2018, at 3.2% in the three months to November.
Investors trimmed their expectations of an interest rate cut from the Bank of England next week on the news, with markets now pricing a 63% possibility, down from 75% on Friday.
‘Today’s labour market release points to a better outlook for the UK economy than many had feared over recent weeks as monthly gross domestic product figures missed expectations amid signs of a slowdown in retail sales,’ said Edward Park, deputy chief investment officer at Brooks Macdonald.
‘Signs that the employment situation is less poor than the market expected begins to balance the negative mood music around the UK economic outlook and may give the Bank of England reason to pause on a rate cut next Thursday.’
Wilson said there have been arguments against an interest rate cut, ‘data has turned notably softer and the Bank doesn’t want to risk allowing weakness to become entrenched’.
Losses on the FTSE 250, whose stocks derive more of their earnings from the UK domestic economy than their blue-chip peers, were more muted, with the ‘mid-cap’ index down 0.6%. The Fidelity China Special Situations (FCSS) investment trust was among the fallers, down 3% at 245.5p.
Dixons Carphone (DC) was the biggest riser, gaining 4.5% to trade at 148p. Although the electrical retailer reported flat sales in the 10 weeks to 4 January, it is making headway online and Hargreaves Lansdown analyst Sophie Lund-Yates said it was ‘on the right road, but the journey isn’t over’.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 7,765.50.
The projected lower bound is: 7,464.07.
The projected closing price is: 7,614.79.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white 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 61.8946. This is not an overbought or oversold reading. The last signal was a sell 3 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 56.69. 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 sell 15 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 -12. This is not a topping or bottoming area. The last signal was a sell 0 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 11 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -40.740 at 7,610.700. Volume was 8% below average (neutral) and Bollinger Bands were 64% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 7,619.02 7,441.82 7,363.95
Volatility: 8 13 14
Volume: 621,741,184 677,466,304 713,661,888
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 3.4% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .FTSE (mildly bullish). Our trend forecasting oscillators are currently bullish on .FTSE and have had this outlook for the last 22 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.