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The UK Index is down on the revival of trade fears, albeit off session’s lows. After several days of calm, investors are back worrying about Trump’s latest threat, which would target £200b of Chinese goods with 10% import duty. This latest effort to ‘correct’ the Sino-US trade imbalance would take him half-way to his avowed $500b ‘nuclear option’, targeting all Chinese exports to the US. His aggressive opener at NATO could also tee us up for a volatile rest of the week in Europe. Even defensive aren’t being spared, perhaps because they have been the ones rallying lately.
Contributors: UK Index -90pts, weighed down most notably by BP & RDSB (Brent Crude oil -2%, profit taking), Miners (Copper -2%, trade war fears, stronger USD), HSBC (heavyweight, trade war fears), BATS/PRU/VOD (profit taking) and MCRO (pre-tax loss). Positive contributors, albeit wildly insufficient, include RB (defensive, weaker GBP), NXT (broker upgrade, bounce momentum) and BDEV (trading statement, expects FY results to beat consensus).
Technicals: The UK 100 has rebounded from 7580 to confirm shallow 6-day rising support.
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The UK 100 has rebounded from 7580 to confirm shallow 6-day rising support.
Watch levels: Bullish 7615, Bearish 7575
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