FTSE spiked from 7,256.6 to 7,331.9 ahead of UK PMI reports. However, when data on manufacturing and services both disappointed expectations, the index started to trade lower. As of this writing at 9:34 am GMT, FTSE is trading at 7,307.9.
It would seem that the cautious optimism we saw earlier in today’s Asian session helped FTSE begin the day with strong. Asian stock indices saw modest gains as the news of US officials being invited over to China to sort out trade agreements gave investors hope that phase one of the US-China trade deal may happen this year.
However, PMI reports from the UK missed expectations. The manufacturing PMI for November was initially eyed to print at 48.8 but it came in lower at 48.3. Meanwhile, the services PMI clocked in at 48.6 versus the 50.1 forecast. Readings below 50.0 are taken to mean that there is contraction in the industry. What’s worse is that these are the lowest readings the reports have printed since July 2016. These numbers could weigh down the FTSE today as it could mean that the British economy could be slowing down in response to Brexit-driven uncertainties.
On the 4-hour time frame, the index looks to be testing resistance at the 100 SMA. If it fails to close above this level which is around 7,327.4, it could mean that sellers are priming to move FTSE back to this week’s lows at 7,200.7. On the other hand, if there are enough buyers in today’s trading, the index could rally to test resistance at its November 19 highs around 7,407.3.Download our latest quarterly market outlook for our longer-term trade ideas.