FTSE 100 Retreat – Diageo Slumps On Disappointing Profits, BP Higher

London FTSE 100

FTSE 100 started in cautious mood following yesterday’s strong gains after upbeat manufacturing data from the UK and Europe. The manufacturing sector in the UK showed signs of improvement in the third quarter as the new orders rise for the first time the last five months while the output growth rose to three year highs. The final UK manufacturing PMI came in at 53.3 slightly below than the expectations of 53.6 for July.

Investors digest corporate earnings from Diageo and BP. Diageo is under selling pressure giving up 5.76% at 2,715 after it reported a drop of 9% in sales to 11.75 billion Operating profit fell to 3.49 billion from 4.12 billion and proposed a dividend of 42.47p per share.

BP trades 5.69% higher at 297.13 after the company reported losses that matched analyst’s forecasts. The company said that it would cut the dividend to 5.25p from 10.5p after reported a second-quarter loss of 6.7 billion in line with analyst’s expectations. The company announced that it would spend $5 billion per year on low carbon investment as it plans to transform to a supplier of renewable energy, slashing the oil production by 40%.

FTSE 100 Daily Analysis

FTSE 100 gives up 0.24% at 6,017 as investors are taking some profits off the table after yesterday’s sharp gains. The index stays above the 100-day moving average keeping the short term positive bias intact. Today’s low at 5,986 would provide minor intraday support. As I mentioned above the next support is at 5,942 the 100-day moving average, which if breached more sellers would jump in, targeting 5,662 the low from May 14. 

On the other hand, bulls need a break above 6,052 the daily high. Next hurdle for the FTSE index stands at 6,194 the 50-day moving average, while a break above might open the way for 6,323 the top from July 21. 

On the upside, first resistance for the Dow index stands at 25,601 the high from yesterday. A move above 25,601 might open the way for a test of 25,027 the high from June 24. If the bulls continue then the next supply zone for the Dow Jones is at 26,274 the 200-day moving average. 

On the flip side, immediate support for Dow Jones index is at 25,096 the low from yesterday. Next support for the Dow Jones will be met at 24,952 the 50-day moving average. A break below 24,952 might open the way for a test of 24,755 the 100-day moving average. 

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FTSE 100 Daily Chart

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