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The UK Index has made a negative start to the week, although it is off its lows of the day. Hampering sentiment is a weaker USD (and thus stronger GBP) hurting defensives (although the dollar is off its lows), and President Trump sounding more aggressive towards Iran, albeit not without a little goading from counterpart Rouhani, denting general risk appetite.
The trade war story is still in play, US Treasury Secretary Mnuchin reiterating the $500bn threat to China and EU President Juncker visiting the White House Wednesday to try and avoid more EU-US tariffs on cars. We also have an acceleration in the deluge of corporate results from both sides of the pond, an ECB policy decision on Thursday and US GDP on Friday.
Contributors: UK Index -30pts, pressured by BATS/DGE/RB/IMB/SHP (stronger GBP), RIO/GLEN/BARC (global growth concerns), AZN (profit taking) and PRU (risk-off). Support from GSK (consumer spin-off speculation), OCDO (momentum, tech proxy), BP/RDSb (oil price higher) and WPP (stake sale in Chinese operations).
Technicals: The UK 100 ‘s bounce off 7620 keeps it in the upper half of its recent 7560-7715 range.
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The UK 100 ‘s bounce off 7620 keeps it in the upper half of its recent 7560-7715 range.
Watch levels: Bullish 7665, Bearish 7640
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
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Prepared by Michael van Dulken, Head of Research