FTSE Volatile Amid OECD Warning vs Central Bank Support
Volatility is showing no signs of disappearing at the start of the week
Share this:
Volatility is showing no signs of disappearing at the start of the week. The FTSE initially failed to hold onto early gains and slipped back into negative territory as traders fretted over the economic fallout of coronavirus on the global economy, before jumping 1% higher as the US markets open.
Traders are grappling with a stark warning by the OECD over the economic hit of coronavirus and a chorus of central bankers vowing support to their economy's in the case of a coronavirus inspired economic slowdown.
The OECD became the first international organization to sound the alarm on coronavirus, warning that the global economy was at risk. The OECD quantified the expected damage forecasting that global growth will halve this year compared to last, potentially pushing the global economy into recession.
Yet Wall Street has focused on the prospect of the Fed loosening monetary policy, leading the index to surge 1% on the open and drag European indices off their lows.
Yet Wall Street has focused on the prospect of the Fed loosening monetary policy, leading the index to surge 1% on the open and drag European indices off their lows.
FTSE vs. Dax
The FTSE is fairing relatively well, back in positive territory, compared to its German counterpart, which remains firmly in the red. There are a few reasons for this.
Firstly, Germany is an exporter nation so the economy could take a harder hit in the case of a global recession.
Secondly, the euro has soared in recent weeks and extended those gains by 1% today. The unfavorable exchange rate is another hit for German exporter firms.
Meanwhile, the FTSE found some support from a weaker pound. Sterling dropped below $1.28 as UK manufacturing activity slipped dipped to 51.7, down from 51.9 in January and as the Bank of England pledged to take all the steps necessary to protect stability in the UK economy.
The FTSE is fairing relatively well, back in positive territory, compared to its German counterpart, which remains firmly in the red. There are a few reasons for this.
Firstly, Germany is an exporter nation so the economy could take a harder hit in the case of a global recession.
Secondly, the euro has soared in recent weeks and extended those gains by 1% today. The unfavorable exchange rate is another hit for German exporter firms.
Meanwhile, the FTSE found some support from a weaker pound. Sterling dropped below $1.28 as UK manufacturing activity slipped dipped to 51.7, down from 51.9 in January and as the Bank of England pledged to take all the steps necessary to protect stability in the UK economy.
FTSE 250 more telling
With the number of cases in the UK ramping up by the hour, the UK is on the cusp of a possible explosion in the number of coronavirus cases. These fears are more evident in the FTSE250, the more domestic focused index, which remains 0.3% lower, despite the uplift in the internationally focused FTSE 100.
With the number of cases in the UK ramping up by the hour, the UK is on the cusp of a possible explosion in the number of coronavirus cases. These fears are more evident in the FTSE250, the more domestic focused index, which remains 0.3% lower, despite the uplift in the internationally focused FTSE 100.
Levels to watch
Despite the uptick of 0.4% today, the FTSE remains firmly below its 50, 100 and 200 sma. It has broken through trend line support with strong bearish momentum still intact.
Immediate support can be seen at 6447 (last week’s low). Immediate resistance can be seen at today’s high 6767.
Volatility is showing no signs of disappearing at the start of the week. The FTSE initially failed to hold onto early gains and slipped back into negative territory as traders fretted over the economic fallout of coronavirus on the global economy, before jumping 1% higher as the US markets open.
Traders are grappling with a stark warning by the OECD over the economic hit of coronavirus and a chorus of central bankers vowing support to their economy's in the case of a coronavirus inspired economic slowdown.
The OECD became the first international organization to sound the alarm on coronavirus, warning that the global economy was at risk. The OECD quantified the expected damage forecasting that global growth will halve this year compared to last, potentially pushing the global economy into recession.
Yet Wall Street has focused on the prospect of the Fed loosening monetary policy, leading the index to surge 1% on the open and drag European indices off their lows.
Yet Wall Street has focused on the prospect of the Fed loosening monetary policy, leading the index to surge 1% on the open and drag European indices off their lows.
FTSE vs. Dax
The FTSE is fairing relatively well, back in positive territory, compared to its German counterpart, which remains firmly in the red. There are a few reasons for this.
Firstly, Germany is an exporter nation so the economy could take a harder hit in the case of a global recession.
Secondly, the euro has soared in recent weeks and extended those gains by 1% today. The unfavorable exchange rate is another hit for German exporter firms.
Meanwhile, the FTSE found some support from a weaker pound. Sterling dropped below $1.28 as UK manufacturing activity slipped dipped to 51.7, down from 51.9 in January and as the Bank of England pledged to take all the steps necessary to protect stability in the UK economy.
The FTSE is fairing relatively well, back in positive territory, compared to its German counterpart, which remains firmly in the red. There are a few reasons for this.
Firstly, Germany is an exporter nation so the economy could take a harder hit in the case of a global recession.
Secondly, the euro has soared in recent weeks and extended those gains by 1% today. The unfavorable exchange rate is another hit for German exporter firms.
Meanwhile, the FTSE found some support from a weaker pound. Sterling dropped below $1.28 as UK manufacturing activity slipped dipped to 51.7, down from 51.9 in January and as the Bank of England pledged to take all the steps necessary to protect stability in the UK economy.
FTSE 250 more telling
With the number of cases in the UK ramping up by the hour, the UK is on the cusp of a possible explosion in the number of coronavirus cases. These fears are more evident in the FTSE250, the more domestic focused index, which remains 0.3% lower, despite the uplift in the internationally focused FTSE 100.
With the number of cases in the UK ramping up by the hour, the UK is on the cusp of a possible explosion in the number of coronavirus cases. These fears are more evident in the FTSE250, the more domestic focused index, which remains 0.3% lower, despite the uplift in the internationally focused FTSE 100.
Levels to watch
Despite the uptick of 0.4% today, the FTSE remains firmly below its 50, 100 and 200 sma. It has broken through trend line support with strong bearish momentum still intact.
Immediate support can be seen at 6447 (last week’s low). Immediate resistance can be seen at today’s high 6767.
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
S&P 500 forecast: Stocks extend drop as correction risks grow
US and global equity markets have extended Wednesday’s sell-off, with Wall Street opening lower after a weak handover from Asia and Europe. The deterioration in risk appetite has been spreading across global markets. The dollar was firmer, Treasury yields were holding onto yesterday’s gains, while gold, silver and bitcoin were all under pressure alongside equities and major currencies.
ASX 200 Rebound Stalls Despite Wall Street Surge
The ASX 200 rebound is struggling for traction despite a powerful Wall Street rally, leaving 8800 resistance and downside risks in focus.
Nikkei threatens breakout as tech rebound broadens
Breakouts across the SOX and Nasdaq are being matched by rebounds across Asia, with the Nikkei now threatening to join the move.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.