UK FTSE 100 (.FTSE) jumps as Bank of England takes extraordinary measures
European stocks rose on Thursday 9 April, as investors continued to focus on signs of a turning point in the coronavirus pandemic and the Bank of England moved to directly support UK government spending.
The FTSE 100 rose 2.3% in London at the open on the last trading day before the long Easter weekend.
Investor attention was focused on a surprise announcement by the Bank of England that it was extending an overdraft-like facility with the UK government, suggesting it will directly finance some state spending. The overdraft facility has not been used significantly since the 2008 financial crisis.
“Direct monetary financing allows the government to deliver the necessary spending to save lives, while reassuring the public that they will not be overburdened with future debt repayments,” said Fran Boait, executive director of Positive Money.
“It also ensures that the Treasury has access to funding even if government debt markets are disrupted, as we have seen signs of during the coronavirus crisis.”
The pound was flat against the euro to €1.1410 and up 0.1% against the dollar to $1.2403 shortly after the announcement.
Elsewhere in Europe, France’s CAC 40 climbed 1.5% and Germany’s DAX opened up 1.5%.
Analysts said investors were still focused on signs that the global coronavirus pandemic could be reaching its peak, suggesting economies may start to come out of lockdown in the coming weeks.
A team at Deutsche Bank tracking the pandemic wrote in a not on Thursday morning: “In the past 24 hours, we have seen new cases rise 6.1% (87,028 cases), down from 9.0% a week ago.
“New fatalities rose 7.8%. That has fallen close to Monday and Sunday’s levels after spiking on Tuesday to nearly 10%.”
Naeem Aslam, chief market analyst at Avatrade, said: “Governments around the world are busy in drawing the plans of re-opening their economies. The longer the lockdown remains in place, the bigger the damage will be.
“But taking precautionary and necessary measures are the most important factors, and governments should not be rushing in to end the lockdown prematurely.”
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 6,310.09.
The projected lower bound is: 5,231.96.
The projected closing price is: 5,771.02.
A white body occurred (because prices closed higher 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 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 84.1660. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 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 50.08. 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 12 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 116.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 15 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 buy 11 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed up 124.880 at 5,802.610. Volume was 84% below average (consolidating) and Bollinger Bands were 4% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 5,586.35 6,379.88 7,125.43
Volatility: 50 60 33
Volume: 1,263,115,776 1,261,556,736 845,990,592
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 18.6% below 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 volume flowing into and out of .FTSE at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .FTSE and have had this outlook for the last 0 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.