FTSE 100 retreated from its seven-day highs as concerns about the looming trade war became more real as ever. The UK stock index had reached an intraday high of 7,413.8 only to give it all up and close at 7,332.1. It finished Tuesday’s trading with a measly 4-point gain.
News about the US possibly interfering in the ongoing protests in Hong Kong dashed hopes of a trade deal between the US and China happening soon. The Hong Kong Human Rights and Diplomacy Act is seen to side with protesters who are pushing to maintain the city-state’s autonomy from mainland China. The Chinese government has already “condemned” the move. It is likely that China could retaliate and make good on their threat to impose tariffs on American goods too.
This news coupled with remarks from US President Donald Trump saying that he can increase tariffs on Chinese goods by December 15 was the perfect storm for risk aversion to dictate market sentiment.
On the domestic front, snap polls following the first live TV debate between Boris Johnson and Jeremy Corbyn did little to help sustain gains in the stock market. Poll results show that Johnson won the debate by 51%. Given the dominating lead that recent polls reflected, market participants thought that he would have a commanding win yesterday too.
FTSE 100 is trading aggressively lower in today’s European session. Connecting the lows from August 23, October 3, and October 18, the index could find immediate support at the rising trend line around the 7,200 psychological handle. If there are no buyers to defend that level, you can look for support at 7,145 and 7,109 where FTSE 100 previously made lows.