Banks down as FTSE struggles again

The FTSE is down 30 points mid-morning as it continues to backtrack on last week’s gains.

Trader looking at data screens
Source: Bloomberg

The FTSE continues to give back last week’s gains. Although the morning’s services PMI data was called to come in weaker, traders did not hang around waiting for confirmation but started selling from the opening bell. Once again, European sentiment has been formed around the overnight events in Asia.

The Bank of Japan has once again hinted at further intervention as the Japanese yen continues to stray from the central bank’s script. The Caixin Services PMI data out of China came in stronger than expected, hitting six-month highs. Considering the increasing importance of the service sector to China’s economy, it is somewhat disappointing traders didn’t take more confidence from it.

Judging by the front page coverage David Cameron’s EU negotiations received, the pro-EU politicians have their work cut out to convince the press, let alone the voting public, that the United Kingdom should remain in the EU. Social media and polls have not always been the most accurate indicators for voter thinking, which partially goes to explain the strength of IG’s Brexit digital 100s binary still indicating a 68% chance of the UK remaining in the EU.

Banks once again find themselves as the worst performing sector in the FTSE. The new kid on the block, Clydesdale Bank, has finally started trading, only 24 hours later than expected. Retail customers will be hoping this is not an omen of the service they can expect to receive. Having set its IPO price at the bottom of the range, the government will be one of many interested parties monitoring investment appetite for this bank as it hovers a couple of pence above its 180p IPO price.

ChemChina’s offer of $43 billion for Swiss firm Syngenta has triggered market expectation that the years M&A activity might finally be kick started by the chemicals sector. The mining sector, for so long a  deadweight around the FTSE’s neck, has shown a little more value this morning with Anglo American, Antofagasta, Rio Tinto and Glencore all jockeying for positions in the list of best performing equities on the day. Ahead of the open, we expect the Dow Jones to start 87 points higher, at 16,240.

FTSE 100 risers and fallers (as of 10.15am)

Company % change Index points
ARM Holdings +2.65 +1.42
Hikma Pharmaceuticals +1.96 +0.21
Prudential +1.68 +2.02
Rio Tinto +1.51 +1.16
Barratt Developments +0.74 +0.16


Company % change Index points
Standard Chartered -4.28 -1.92
Hargreaves Lansdown -4.25 -0.47
Barclays -4.23 -4.77
3i Group -3.51 -0.56
Royal Bank of Scotland Group -3.03 -0.91

Key Charts to Watch

FTSE 100
The small correction that FTSE 100 enjoyed this morning has been reversed and it has printed fresh lows of the day. Now acting as support is 5850, and if we see an hourly close below it, that would be a bearish signal and 5769 is the next big support level in sight. Rallies will encounter resistance at 5916 and 5952. 

US oil
US oil has bounced back this morning and $31.54 will be the initial stumbling black. An hourly close above $31.54 would be a bullish indicator and the next resistance level will be the trend line at $32. Moves lower in oil will find support at $30.80 and $30.14  

Sterling is extending its gains after the positive UK services PMI report, and the upward GBP/USD trend continues. We are seeing $1.4445 provide support, and should the level be held the resistance at $1.4493 will be the target. An hourly close above $1.4493 would be a bullish signal and $1.4594 is the next major resistance level in sight. An hourly close under $1.4445 would be a bearish indicator and $1.4362 is the next big support level in sight. 

The day ahead:

Economic date:
1.15pm – US ADP employment change (January): exp 193,000, prior 257,000.

3pm – US ISM non-manufacturing PMI (January): exp 55.1, prior 55.8.

3.30pm – US crude oil inventories: exp 3745K, prior 8383K

Corporate reporting:


Full year earnings: GlaxoSmithKline


Quarterly earnings: General Motors Co, GoPro Inc, Merck & Co Inc, Mondelez International Inc,

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