FTSE 100 gives up over 1% as stocks rattled by the coronavirus spread in China Chinese officials confirmed 291 cases as of January 20th. Meanwhile the UK jobs report came in with big gains in employment. The U.K. employment grew by 208k in the three months to November with the unemployment rate steady at 3.8%. Increased hiring activity came with higher headline wage growth at 3.2% beating forecasts of 3.1%. The ILO Unemployment Rate came in at 3.8% in line with projections for November.
Better UK employment data might provide some relief to hawkish pressures for the Bank of England and a wait and see approach might be adopted. Flash PMIs release on Friday would be the catalyst for the Bank of England’s next move.
Meanwhile a new front in the tariffs war is developing. The U.S. Treasury Secretary Steven Mnuchin warned Italy, and UK that will face US tariffs if they proceed with a tax on digital companies.
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FTSE 100 is 1.22% lower at 7,558 as stronger employment data decrease the possibility for a rate cut in the next BOE policy meeting. Stock investors are taking some profits off the table after the FTSE hit six-month highs the previous week. The technical outlook is still positive despite today’s sharp pullback.
On the downside, initial support for the FTSE index will be met at 7,550 the daily low. If sellers break that level the next support zone will be met at 7524 the low from January 8th. Bullish momentum might be cancelled if the index breaks below the 50-day moving average at 7,440.
On the upside, first resistance for the index stands at 7,651 the daily top (lower high). The next hurdle for FTSE 100 stands at 7689 the high from January 17th. The 2019 high from July 30th at 7,727 is the next supply zone.