- The threat of a ‘no deal’ has been removed following today’s vote in Parliament, making way for a higher pound that will ultimately weigh on multinationals.
- London stocks moved further lower on Wednesday as sterling pushed to another seven-month high vs the greenback and a 21-month high vs the bloc currency.
The top-flight FTSE 100 index dropped 0.61% and its closed at its lowest level in nearly two weeks at 7,107.20 as the pound rallied through the 1.33 handle vs the greenback and to July 2018 levels. EUR/GBP dropped to mid-May 2017 lows at 0.8538 and extended the downside in NY trade to 0.8528 as The Commons voted on some amendments. These included Amendment F: Noting May’s commitment to hold a vote on March 14 on whether to delay Brexit if parliament has rejected her deal – UK Lawmakers voted 502:20 to accept Copper’s Amendment F – which was already priced into the markets.
Best and worst performers
In corporate news, one of the major inputs to the indexes decline came in Marks & Spencer shares dropping on headlines that the retailing giant will slash its dividend by 40% and conduct a rights issue to raise to £600m to fund the acquisition of a 50% share in Ocado’s UK retail business. The top of the pack was, Taylor Wimpey (TW.) 177.00p +3.54%, Ocado Group (OCDO) 1,019.00p +2.93% and Persimmon (PSN) 2,452.00p +2.34%. The worst of the index were Marks & Spencer Group (MKS) 265.40p -12.47%, NMC Health (NMC) 2,618.00p -4.31% and Hiscox Limited (DI) (HSX) 1,572.00p -3.79%.
FTSE levels
The monthly sticks are on their way to completing a second bullish candlestick. An additional bullish monthly stick would leave three white soldiers on the charts, promising an extension of the upside and reversal of 2018 summer decline. However, for the time being, the bears are on track for a test of the 2019 uptrend support area between 7002 and 8th Feb lows at 7064 – just below 7070 (recent double bottom daily lows (made up of 38.2% Fibo of May 2018 highs to Dec 2018 lows and Feb/Mar 2018 and Feb 8th 2019 lows)).
However, 4hr stochastics are oversold while daily readings offer downside potential, perhaps following some near-term consolidation and a move back towards the resistance of the descending channel and a horizontal line of prior resistance around 7145. On an extension of the upside, bulls need to get through the 200-D SMA at the round 7272 level, a moving average that was last tested and breached momentarily back in Sep 2018.
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