FTSE 100 continues higher for the third consecutive session on fast recovery hopes and better economic data from the UK and China. The Caixin Services PMI came in at 55, beating the expectations of 50.3 in May. The services sector activity rose for the first time in four months, while the New orders jumped at the fastest pace in a decade, indicating a sharp recovery in certain parts.
Investors sentiment also boosted by news that Germany plans to lift travel ban for EU member countries, UK and Switzerland from June 15.
UK Services PMI Beat Expectations
United Kingdom Services PMI came in at 29, topping the expectations of 28 in May as the downturn in services sector continues amid the coronavirus crisis.
The Director at the Chartered Institute of Procurement & Supply, Duncan Brock, commented:
“May’s survey data painted a concerning picture of a lockdown slowdown across the service sector as employment dropped at the second-fastest rate on record, pipelines of new work were woefully empty, and business confidence continued to suffer. “As the pandemic progressed any hoped-for bounceback in business output never really got going in May following the previous month’s awful results, though a modicum of recovery will offer small respite in some sectors. Pockets of trading began again as firms began adapting to social distancing measures, though only 15% of companies reported a rise in new orders this month. “As restrictions are eased, there is still extreme uncertainty about how the pandemic will pan out. Continued anxiety about the coronavirus means consumer spending may not be the wind beneath the sails of any immediate return to pre-virus economic activity.”
FTSE 100 is 1.16% higher at 6,292 as the index hits the highest level since March 9. FTSE 100 has gained 27% since the March lows and now bulls eyeing the resistance at the 100-day moving average. The RSI indicator implies that there is room for higher levels. The long term picture remains bearish for the index, and only a credible break above the 100-day moving average at 6,397 might cancel that.
As investors look for higher levels, the index will meet initial resistance at 6,299 the daily top. More selling pressure will emerge at 6,397 the 100-day SMA. In case of a move higher, the next resistance will be met at 6,461 the high from March 9.
On the other hand, initial support for the FTSE index will be met at 6,220 the daily low. Next support zone stands at 6,161 the low from yesterday’s trading session. If the sellers break that level, then the next support is at 6,073 the low from June 1.