UK FTSE 100 (.FTSE) slowly rebound from Coronavirus fears
Over the last week, UK markets have been slowly rebounding from fears of the economic damage caused by the Coronavirus, as the rate of infections and death numbers have been steadily decreasing daily.
The FTSE 100 started the week in the red, as concerns grew over the spreading of the virus, however, the index then bounced back, rising 0.82 per cent for the week to Wednesday.
Further afield, global markets have also reacted favourably to the slowing of the pandemic.
In the US, the Dow Jones Industrial Average grew 0.97 per cent, Hong Kong’s Hang Seng Index advanced 2.69 per cent and Shanghai’s SSE Composite Index expanded 2.26 per cent from the start of the week.
By Wednesday, there had been over 45,000 reported infections and 1,116 deaths, however, the second half of the week saw the rate of increase in numbers decline. On Tuesday, the Federal Reserve (Fed) Chairman Jerome Powell stated that the US are “closely monitoring” the economic effects of the Coronavirus, which may potentially disrupt supply chains across the world.
Back in the UK, the Office for National Statistics released data on Tuesday which showed that UK Gross Domestic Product had not grown in the last quarter of 2019. The data revealed that the 0.3 per cent growth in December was largely offset by Brexit uncertainty and US-China trade wars in the previous two months, which hit the manufacturing sector particularly hard with production falling 1.1 per cent, compared to the previous quarter. However, investor sentiment was still buoyed by the data, noting it was still in line with expectations and signalled a solid start for the year.
Similarly, the Pound advanced 0.62 per cent against the US Dollar since the start of the week, as currency markets also adjusted to the news flow.
In perhaps the biggest regional news story of the week, Boris Johnson has now approved the controversial High Speed 2 (HS2) UK rail project, which now may cost up to £106bn to implement.
The decision was described as one that has not been made easily, as the project has already seen delays, and the projected costs have nearly doubled from £56bn.
The main argument supporting this decision revolves around making the north of the UK more accessible and lowering the travel times between London, Birmingham, Leeds and Manchester as well as upgrading the infrastructure.
However, there have been critics arguing that the increased cost outweighs the benefits and that focusing on smaller improvements in northern towns and cities would yield larger economic benefits.
There is also the environmental angle to consider, with concerns raised about the impact development would have with over 100 woodlands potentially being destroyed for construction. The announcement has at least removed uncertainty regarding projects for Kier Group, Costain and Balfour Beatty, which consequently saw their share prices rise by 10.5 per cent, 8.45 per cent and 1.61 per cent respectively.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 7,590.18.
The projected lower bound is: 7,238.10.
The projected closing price is: 7,414.14.
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 30 white candles and 20 black candles for a net of 10 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 38.8286. 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 44.46. 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 33 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 -21. This is not a topping or bottoming area. The last signal was a buy 8 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 3 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -42.900 at 7,409.130. Volume was 10% below average (neutral) and Bollinger Bands were 0% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 7,456.19 7,489.33 7,365.85
Volatility: 14 15 15
Volume: 685,948,672 657,496,320 714,940,928
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 0.6% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 13 periods.