FTSE 100 Lower On GDP Data Disappointment, Shell Warning

FTSE 100 trades lower in early trading as investors are cautious amid a rising number of new coronavirus infections in the USA. PM Boris Johnson will announce later today, a £5bn fast-track infrastructure spending plan, to boost the economy, with a more detailed ‘new deal’ plan to be published after the summer. 

The UK Gross Domestic Product came in at -2.2%, below the forecasts of -2% in the first quarter. The yearly GDP reading came down to -1.7% below the expectations of -1.6%. The balance of payments deficit grew to 21.1 billion pounds in the 1Q, above the forecast of 15.4 billion pounds.  

Bank of England expects a contraction of 20% in the first half of the year and estimates the slump to be the worst in three centuries. 

More robust economic data from China improve sentiment. The China manufacturing purchasing managers’ index (PMI) rose to 50.9, up from 50.6 in May, and better than economists expectations of 50.4. The non-manufacturing PMI rose to 54.4, better than expectations of 53.6.

Shell is 1.75% lower at 1,316 after the announcement that it will take a $20 – $27 billion hit to 2Q pre-tax profits from impairments after revising its outlook for commodity prices and margin for 2020. The company said it expected a Brent oil price of $35/barrel in 2020, rising to $40 in 2021, $50/barrel in 2022 and $60 in 2023.

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FTSE 100 Daily Technical Analysis

FTSE 100 is 0.51% lower at 6,193 as the index give sup some of yesterday’s gains but stays above the 100-day moving average, keeping the short term positive momentum alive for the short term. 

On the downside, the first support for the FTSE 100 index will be met at 6,189 the daily low. If the sellers break that support, then the next target is at 6,155 the 100-day moving average. A break below would attract more bears targeting 6,064 the 50-day moving average.  

On the other side, the immediate resistance for the FTSE 100 is at 6,237 the daily top. The next resistance stands at 6,259 the high from June 26 trading session. Next hurdle to watch is at 6,319 the high from June 24.

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