UK FTSE 100 (.FTSE) slides as strong pound offsets positive session for housebuilders
The FTSE 100 closed lower after the strengthening pound pressed on the index following a bright morning driven by good performances from housebuilders.
London’s top flight closed 38.78 points lower at 7,571.92 at the end of trading on Wednesday.
It was a largely subdued trading session for blue-chip firms with exception to construction firms, as Berkeley’s plans for a £1 billion shareholder payout were welcomed by investors across the sector.
The UK housebuilder said it will pay out £500 million to shareholders in March this year and another £500 million a year later.
Berkeley led the FTSE 100 at the close of play after its shares jumped 226p to 5,412p as a result.
The announcement helped to boost its rivals in the sector, with Taylor Wimpey closing 2.1p higher at 216.4p, and Persimmon closing 24p higher at 3,001p.
Fiona Cincotta, analyst at City Index, said the “firmer pound and disappointing corporate updates” offset positivity among housebuilders and Wall Street traders to leave the FTSE in the red.
UK-oriented housebuilders were also optimistic over the stronger pound, which rose in value after the Confederation for British Industry’s latest manufacturing report highlighted rapidly improving business confidence.
Connor Campbell, financial analyst at Spreadex, said: “Sterling rose against the dollar and the euro, hitting two-week and two-month highs respectively, after the CBI industrial order expectations reading outperformed forecasts.
“Crucially that dragged the likelihood of a Bank of England rate cut next Thursday from 75% to a 50-50 toss-up. Hardly the best situation for the pound to be in … but it was enough for a currency looking for good news.”
The value of the pound increased 0.64% versus the US dollar at 1.313 and rose 0.63% against the euro at 1.184.
Meanwhile, the European markets were largely subdued, with the Dax continuing to tease around an all-time high for the index.
The German Dax increased by 0.05% while the French Cac moved 0.58% lower.
Across the Atlantic, the Dow Jones opened higher, returning to growth despite Treasury Secretary Steve Mnuchin’s comments that there is no hard deadline for the US and China to complete phase two of their trade talks.
In company news, Sainsbury’s dipped lower after chief executive Mike Coupe announced plans to step down from the role after six years.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 7,726.42.
The projected lower bound is: 7,425.92.
The projected closing price is: 7,576.17.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 38.0504. This is not an overbought or oversold reading. The last signal was a sell 4 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 51.94. 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 16 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 -52. This is not a topping or bottoming area. The last signal was a sell 1 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 -38.780 at 7,571.920. Volume was 15% below average (neutral) and Bollinger Bands were 63% 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: 7,618.71 7,446.07 7,364.58
Volatility: 8 13 14
Volume: 621,582,016 678,857,472 713,180,160
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 2.8% 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 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 23 periods.