FTSE 100 hit by uncertainty as May postpones critical Brexit vote
With the prospect of a heavy defeat casting a cloud on the Brexit deal vote that was scheduled to take place today, UK Prime Minister, Theresa May has decided to cancel the parliamentary vote on the agreement reached between London and Brussels over the terms of Britain’s exit from the European Union (EU).
Prime Minister Theresa May will look for more satisfying assurances that the backstop is temporary when she meets Donald Tusk and Jean-Claude Juncker, European Commission president, today. She is also expected to meet Angela Merkel, the German chancellor, and Mark Rutte, Dutch prime minister.
However, on yesterday morning the European Commission, through representative Mina Andreeva, reiterated that for Brussels “this agreement is the best and only possible”, leaving no room for any renegotiation.
Meanwhile, the Court of Justice of the European Union (CJEU) confirmed, yesterday morning, that if it so wishes, “the United Kingdom can unilaterally revoke the notification of its intention to leave the European Union”. According to Scottish Prime Minister Nicola Sturgeon, this ruling by the CJEU can open the door to a new referendum on the UK’s to remain in the EU.
Top FTSE 100 Gainers and Losers yesterday:
Randgold Resources (3.81%), 3i (2.16%), GlaxoSmithKline (1.41%) among the top FTSE 100 gainers for the session.
Barratt Developments (-7.49%), GVC (-6.24%), Associated British Foods (-6.04%) were among the worst FTSE 100 performers of the session.
The consumer price index (CPI) in the United Kingdom (UK) came in unchanged at 2.4% in October, the same as in September and coming up short analysts’ estimates of 2.5%. Prices slowed for transport and food but rose at a faster pace for housing and utilities, recreation and culture. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive for the GBP, while a low reading is seen as negative.
Since the beginning of 2018 until last Monday close, the UK index remains underwater with over 11.0% loss and since the start of December lost its grip resulting in more than a 4.5% drop. Nonetheless, the week began in the right direction with over 0.5% rise and on the daily basis closed in the green with a 0.65% gain. Furthermore, the index remains in a bearish phase since early October.
On yesterday session, the FTSE 100 opened with a gap down of -0.45% but managed to rise although found enough selling pressure near 6,818.5 to trim some of its early gains and consequently closed in the middle of the daily range, in addition, closed within last Friday range, which suggests being clearly neutral, neither side is showing control. The stochastic is showing an oversold market and is displaying lack of momentum although is below the 50 midline.
October can be seen as the darkest month for the FTSE 100, November could be classified as a choppy sideways consolidation and December began on the left foot drag down by the uncertainty of the Brexit deal. The UK index continues to do lower highs and lower lows all signs of a well-established downward trend and even made a new year-to-date low at 6,670.0 last week.
The next key support zone remains at 6,604.5 down to 6,560.0 (Jul, Aug, Sep 2016) and a strong daily support zone at 6,442.0 down to 6,343.0.
UK100 is a CFD written over FTSE100 futures.
UK100 Dec ’18 Daily Candlestick Chart
Watch out this Week:
Tuesday, December 11 at 09:30 GMT (04:00 ET): The National Statistics is scheduled to release UKs’ ILO Unemployment Rate in October, which is expected by market analysts to come in unchanged at 4.1% compared in the previous month. This is a leading indicator for the UK economy. If the rate is up, it indicates a lack of expansion within the UK labour market. As a result, a rise leads to weakening the UK economy.
Written by Hugo O’Neill, External Analyst
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