Oil Rebounds, PMI's and US Jobless Claims
Fiona Cincotta April 23, 2020 7:19 AM
European bourses are pointing to a mixed start as oil prices gain and more US aid is coming, but PMI's and US jobless claims could hit hard
European markets are pointing towards a mixed start as investors digest the promise of more US aid to cushion the blow of the coronvirus hit, in addition to rising oil prices. However, with dire PMI data and US jobless claims lined up to be released later in the session, traders are questioning the next move.
Oil has been the key driver of markets across the week. After Brent fell to its lowest level since mid-1999 in the previous session, it then rebounded in the latter part of the day. After some wild swings in trading WTI ended the previous session 19% higher whilst Brent added 5% . The rally came thanks in part to President Trump’s warning to Iran over harassing US ships. They say timing is everything. There is a distinct whiff of Trump stirring up political tensions to intentionally boost the price of oil. Still it appears to have been just the prompt that oil traders needed and WTI has jumped a further 10% in early trade. Sentiment has been closely tied to oil price swings; today’s push higher could help under pin bourses.
Sentiment clearly remains fragile and that could be magnified with the release of the PMI readings for the UK and Eurozone. The service sector accounts for 80% of UK economic activity. In March the UK service sector contracted at the fastest pace on record, dropping to 34.5 on the index. And that was only the beginning of lock down! This months’ reading is expected to dive deeper into contraction territory to 29. The manufacturing sector, which has not been as servery impacted by the stay at home measures is forecast to contract further to 42 in April down from 47.8 the previous month.
Sticking with data, the US jobless claims, which have become the most closely followed US macro, release will be in focus. So far, over a 4-week period 21 million Americans, equivalent to 13% of the US workforce have signed up for unemployment insurance. This number is expected to increase by 4.5 million.
FTSE Levels to watch
FTSE futures are trading at pointing to a 0.25% fall on the open, even so the upward trend remains intact.
Immediate resistance can be seen at 5854 (high 17th April) prior to 5950 (high 14th April).
Immediate support can be seen at 5700 (tend line support) and break below here could negate the uptrend and open the door to 5622 (21st April) and 5528 (low 15th April).
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