FTSE Jumps As Mood Improves But PMI's Could Hit Hard
Fiona Cincotta March 24, 2020 7:37 AM
Will PMI's shatter the improved sentiment?
European stocks are bounding higher on Tuesday, as the mood in the market improves. The number of deaths in Italy from coronavirus dipped for a second straight day, fuelling hopes that the devastating outbreak may have peaked there. The government announced a death toll of 602, down from 651 on Sunday and 793 on Saturday.
Whilst it is definitely far too early to try to call the bottom there are certain factors that trades will be watching for. These include signs of each country peaking, sufficient monetary and fiscal support to prevent the collapse of the economy and of course any signs of a vaccination.
The improved mood also came after the Fed unleashed unlimited quantitative easing and as there are signs of progress in Washington towards the agreement of a $2 trillion rescue programme.
However, this improved mood could be shattered by the release of PMI data. Expectations are for manufacturing and service sector UK PMI’s to fall sharply to 45 and 45.1 respectively, down from 51.7 and 53. Even if the data did come in better than forecast, which is unlikely, the revision will be significantly worse after the UK goes into lockdown.
Levels to watch
The FTSE has jumped 3% higher on the open. On the 1 hour chart the FTSE has pushed through both the 50 and 100 sma. It currently attacking the 200 sma at 5210. A meaningful move above this level could see more bulls jump in.
Immediate resistance can be seen at 5210, prior to 5440 (high 20th March). A move beyond this level could negate the downward trend.
Immediate support can be seen at 5006 (low overnight) and 4780 (yesterday’s low).
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.