FTSE Jumps On Coronavirus Hopes
Fiona Cincotta February 5, 2020 11:25 AM
FTSE bounded higher following unconfirmed reports of a breakthrough in the development of a Coronavirus vaccine.
Despite a brief dip lower on the open the FTSE, along with other European bourses bounded higher following unconfirmed reports of a breakthrough in the development of a Coronavirus vaccine. Additionally, China TV reported that a research team from Zhejiang University has found a drug that is effectively treating people infected with the virus. Whilst unconfirmed, these reports have gone some way to improving sentiment surrounding the spread of the deadly virus.
Traders have been fretting over Coronavirus statistics and the impact that it is expected to have on Chinese economic growth. These fears saw equity indices across the globe slump last week. The latest developments, however, are providing the markets with a level of assurance that the situation is getting under control, boosting risk sentiment.
Whilst the FTSE was up over 1% on Coronavirus hopes, at one point, the UK index has since pared some gains, despite the pound also giving up an early rally.
FSTE lags peers on stronger pound
Sterling pushed comfortably back over the key $1.30 psychological level following upbeat service sector pmi figures. Activity in the UK’s dominant sector measured 53.9, well up from the 52.9 forecast and the strongest reading since September 2018. This makes it a hat trick of stronger than forecast pmi data, proving that the U.K. experienced a bounce in business and consumer confidence following the decisive Conservative win in the December elections.
However, by the afternoon, dollar gains dragged sterling lower. This was more of a dollar strength story rather than owing to a fundamentally weaker pound. However, unusually, the effects of a more beneficial exchange rate didn’t result in an extra boost for the FTSE.
Levels to watch
The FTSE is trading 0.6% higher, having pared some earlier gains. The index pushed above its 100 sma in the previous session and briefly breached its 50 sma today at 7474. A close above the 50 sma could indicate that the bulls are back in control.
Immediate resistance can be seen at 7474 (50 sma) 7503, the daily high, followed by 7632 (high 24th Jan)
On the downside support can be seen at 7386 today’s low, prior to 7377 its 100 sma and 7297 (yesterday’s low).
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.