FTSE 100 retreat today after a four-day rally that hit two-week highs. The PBOC said that the country’s economy could be disrupted in the 1Q 2020 as a result of the coronavirus outbreak, but the central bank expects a sharp recovery once the coronavirus is brought under control. Some economists estimate that China’s first-quarter growth could slow down to 4% from 6% in the last quarter of 2019. The PBOC is ready to inject liquidity and deepen interest rate reforms. China announced yesterday that would cut retaliatory tariffs on some U.S. goods by half starting February 14th.
China’s National Health Commission announced that the new confirmed coronavirus cases decreased for a second straight day, indicating the effectiveness of the control measures.
Investors sentiment lifted by news that there is substantial progress on the coronavirus cure and vaccine. In Wall Street the indices hit fresh record highs helped by US politics, robust economic data and another intervention from China with the tariff cuts announcement. Investors also hope for more stimulus from other central banks.
On the data front the UK Halifax House Prices came in at 0.4% topping the forecasts of 0% in January. The yearly reading came in at 4.1%, also above the forecasts of 3%.
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FTSE 100 Support and Resistance
FTSE 100 is 0.26% lower at 7484 as investors taking some profits off the table. The FTSE 100 tested the 50-day moving average in early trading and managed to bounced 10 points as stock investors await the U.S. NFP report later today. The technical outlook is bullish for FTSE but might be cancelled if today closes below the 50-day moving average.
On the downside, initial support for the FTSE 100 index stands 7475 the 50-day moving average and the daily low. If the FTSE 100 index breaks below, the next support for the FTSE 100 is the 100-day moving average at 7380. While more bids might emerge at 7327 the low from February 4.
On the flip side, first resistance for the FTSE 100 stands at 7,506 the daily high. The next obstacle for FTSE on the upside is the high from January 27, at 7589. While more offers would emerge at 7639 the high from January 26.
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