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UK FTSE 100 (.FTSE) struggles for direction as dividend axe continues to fall

UK FTSE 100 (.FTSE) struggles for direction as dividend axe continues to fall

he FTSE 100 continued to struggle for meaningful momentum in late morning trade with the UK still firmly in lockdown and government failing to ramp up its coronavirus testing programme to plan.

The UK yesterday saw its largest number of deaths since the virus took hold in the country. In Italy, however, the virus impact appeared to stabilise with just 12 new cases of the virus reported on Wednesday.

At 11:40am, the benchmark FTSE 100 index was barely making double-digit headway, adding just 11 points, or 0.2%, to 5,465.73. The FTSE 250 fell 0.85% to 14,424.23.

MORE DIVIDENDS FACE THE AXE

In company news, energy firm Centrica said it would cancel its dividend as part of a move to cut costs and said it would delay the sale of its stake in Spirit Energy until energy and financial markets were stable. On the back of the announcement, the shares price fell 7% to 34.46p.

Distribution and services company Bunzl pulled its dividend despite reporting a rise in revenue in the first quarter of year. The firm warned of disruptions as the food service and retail sectors were expected to be significantly affected by lockdown measures.

The company said it would no longer propose a final dividend for the year ended 31 December. The shares dipped 1.4% to £15.43.

National Grid said it had not yet seen a ‘material impact’ on its financial performance from the virus outbreak but was starting to see some delays and disruption to its capital programme. Shares fell 4% to 871.2p in early trading.

Comparison website Moneysupermarket.com has committed to pay its final dividend for 2019, bucking a growing trend among companies who are cancelling or suspending payouts to preserve cash. Moneysupermarket declared an 8.61p per share payout alongside its full year results on 20 February but the dividend policy will remain under review for this year.

The news will come as only a modest lift to shareholders after Moneysupermarket pulled 2020 guidance as the coronavirus put a severe dent in business in recent weeks.

The share price reversed 1% to 289.4p.

RECRUITER WARNS

Shares in recruitment firm Hays plunged 10% to 198.5p after it said it had seen ‘a very material deceleration in client and candidate activity’ in March, scrapped its interim dividend and tapped investors for £200m.

Similarly, Safestore said its key trading performance indicators showed to relatively limited impact from the pandemic, with 4.92 million square feet of occupied space across the portfolio, a drop of just 0.8% since its first quarter ended on 31 January. Shares rose 4.3% to 631p.

Pharma giant AstraZeneca said it had completed the previously agreed sale of its global rights to Movantik, a treatment for opioid-induced constipation, to RedHill Biopharma for at least $52.5m. Shares dipped 1.8% to £69.72.

Popular high street store Pets at Home said it expected underlying pre-tax profit for the full year to be slightly above the top end of the range of current market expectations.

For most of the fourth quarter, the group traded in line with market expectations although it saw a dip in demand in-store and online in the closing weeks of the year. Shares felling 3.5% to 231.6p.

Low-cost airline Wizz Air revealed that the virus had forced it to cut capacity by 34% in March. It operated rescue flights from Germany to Ukraine, from Malta and Croatia to North Macedonia as well as from North America to Hungary in order to repatriate passengers.

It is currently running flights from China to Hungary in order to deliver medical equipment such as protective gear and coronavirus test kits. Shares nudged 1.5% higher at £21.30.

Rival low-cost airline easyJet said it had received a request from founder Stelios Haji-Ioannou to call a general meeting to remove Andreas Bierwirth as a director of the company. Shares dropped 1.9% to 519.6p.

William Hill said it had appointed Matt Ashley as its chief financial officer with effect from 6 April 2020, while Stephen Parry will take up the role of chief operating officer later in the year. Shares drifted 0.3% to 66.72p.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 5,971.32.

The projected lower bound is: 4,908.03.

The projected closing price is: 5,439.67.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 39.6093. 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 40.75. 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 7 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 35. This is not a topping or bottoming area. The last signal was a buy 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.

Rex Takasugi – TD Profile

FTSE 100 INDEX closed up 25.650 at 5,480.220. Volume was 59% above average (neutral) and Bollinger Bands were 64% wider than normal.

Open     High      Low     Close     Volume___
5,454.5705,552.3605,395.0705,480.2201,554,236,544
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 5,481.54 6,563.11 7,169.93
Volatility: 76 59 32
Volume: 1,660,748,160 1,217,756,928 836,635,136

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.

Summary

FTSE 100 INDEX is currently 23.6% below 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 moderate flows of volume out of .FTSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .FTSE and have had this outlook for the last 47 periods.

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