Yesterday, trading Associated British Foods shares was suspended after the company said that it would be closing a significant number of Primark stores. Following the announcement, the seemingly unimaginable happened: the Associated British Foods share price dropped to 0.
As it turned out, it was a fat finger error. This is the technical term to describe an erroneous action by a trader that results in drastic market movements. Consequently, trading the stock was suspended for 30 minutes. Its price was also reset but it still closed lower by 5.2% at 1,739.5.
According to a statement from Associated British Foods, it closed its stores in Italy, Spain, France, and Austria. Governments in these countries have imposed heavy restrictions on non-essential stores to contain the spread of the coronavirus. Consequently, this has led to losses for the company. Stores in the above mentioned countries generated 190 million pounds in sales and contributed to 30% of its revenue.
On the monthly time frame, you can see that Associated British Foods share price is currently testing support at the 100 SMA. If the candlestick for March can close above the indicator, around 1,652.5, it indicates the presence of buyers in the market. This could suggest a potential rally to previous lows around 2,055.5.
On the other hand, a break of the SMA means we’ll need to brace for a bigger drop. The next support level for the share price could be at 1,190.0 where it topped on January 4, 2011.