The FTSE 100 finds itself pegged back this Thursday following downbeat CBI Business Expectations data.
CBI Industrial Order Expectations dropped from -34 to -40, which represented a worse-than-expected reading for a data set that was expected to have declined to -39. This report indicates a slump in UK manufacturing activity in the three months leading to November.
According to Anna Leach, the CBI’s Deputy Chief Economist, output volumes dropped by their slowest pace in more than a year, with a softening of order books as the reinstatement of lockdowns due to the second wave of the coronavirus pandemic forced manufacturers to scale back on their expectations. Indeed, 14% of UK businesses indicate low or zero confidence they would survive the next quarter.
After initially hitting intraday lows from a 50-point drop on the CBI report, the FTSE 100 is now marginally up by 0.32%. The downbeat data from the CBI was countered by AstraZeneca’s announcement that its coronavirus vaccine candidate, being developed with the University of Oxford, had produced a strong immune response in the 65-70 years age group in trials. This news is significant as immune responses in the elderly tend to be muted as a result of age-related degeneration of the immune system in humans. This report has provided hope that a particularly vulnerable demographic could have protection if the vaccine comes good.
Technical Levels to Watch
Price action continues to test the 6325.3 resistance level, with the FTSE 100 needing to see two successive daily candles closing above this resistance to confirm a break of that level. If this occurs, a run towards 6405.3 becomes more probable. However, only a break of this level and the 16 November high would allow the index to make a run towards 6514.8 (8/9 June highs).
Conversely, failure to break beyond 6325.3 may give room for rejection and a pullback towards the 6200.0 psychological support. 6067.6 only becomes a logical target if 6200 gives way. The index continues to search for direction as a confluence of competing fundamentals continue to pull on the index from all sides.
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