FTSE 100 started the day higher figures showed the UK economy has fallen into recession for the first time since 2009 – the Great Financial Crisis – due to the coronavirus outbreak.
Office for National Statistics (ONS) showed the UK economy contracted by 20.4% in the second quarter of 2020, after a contraction of 2.2% in the first quarter of 2020. The figure is slightly better than economist’s estimates of a 20.5% contraction. UK GDP contraction is the worst among the G7 countries. Eurozone has contracted by 12.1% and the USA by 9.5% in the second quarter. In June, the UK economy showed some signs of improvement as it grew by 8.7% above the expectations of 8% growth.
Yesterday the UK employment data came mixed, but the June ILO unemployment rate came down to 3.9% better than analyst’s expectations of 4.2%. The unemployment reading for May was at 3.9%. The employment change for June came in at -220k below the estimates of -300k. The May reading was at -125k.
The banking sector gain today supports the FTSE. Lloyds is 0.90% higher at 29.73, NatWest is 0.54% higher 120.03. HSBC Holdings is 1.71% higher at 351.93, while Barclays is 0.23% higher at 111.98.
FTSE 100 Analysis
FTSE 100 adding 0.50% today at 6,184, testing the crucial 50-day moving average again. The FTSE 100 yesterday spent some time above that resistance but settled below, as the bears returned ahead of the closing bell. If bulls fail for the second day at 6,181, then a correction is expected.
The first support is at 6,151 the daily low. More bids would emerge at 6,039 the low from yesterday’s trading session. The 100-day moving average at 5,995 would provide the next strong support which if breached might cancel the bullish momentum.
On the flip side, initial resistance stands at 6,196 today’s top. More offers await at 6,279 the high from July 23 trading session. Next resistance zone is at 6,332 the top from July 21.
FTSE 100 Daily Chart