FTSE closes higher, but below 7475 resistance
The FTSE charged higher in early trade on Tuesday, boosted by a broad risk on sentiment across global markets and a weaker pound. Propping up the FTSE are financials and the large multinationals which earn substantial profits abroad and so benefit from the favourable exchange rate. This morning’s rally ran out of steam later in the session and the FTSE is coasted through the afternoon, following a mildly stronger open on Wall Street.
If the FTSE holds its nerve it could on track to hit a record high of 2019. However, the UK index needs to over come resistance at 7475, last week’s high a level that it has bounced off a couple of times. Investors opted to hold fire below the key resistance of 7475 until China’s GDP is released overnight. This will provide a strong clue as to whether the global economy is stabilising or whether there is more bad news to come.
Brexit talk trouble overshadows strong wage growth
The pound barely reacted to the UK labour data. Unemployment held steady at 3.9%. Wages growth came in as expected at 3.5% yoy in the three months to February, whilst January’s figure was also revised higher to 3.5%. Whilst wages impressed, an area of concern was the jobless claim count. This jumped to 28.3K, significantly above the 20k forecast. The number of people filing for unemployment benefit has been on the rise for quite some time. Whilst today’s numbers are not anywhere near weak enough to create alarm, a continuation of this current trend could point to clouds forming on the horizon. This could be an early indication that tightening of the UK labour market is starting to slow.
The pound’s reaction was muted to the report as Brexit headlines and reports of talks stalling between Theresa May and Jeremy Corbyn dragged on demand for the pound.
Dax surges on rebounding ZEW sentiment data
The Dax was outperforming its peers on Tuesday and climbed to a six-month high as traders cheered strong German ZEW sentiment data. After a year of gloom, the outlook in Germany is finally brightening. The German ZEW sentiment data rebounding strongly to 3.1, well above the 0.5 expected suggests that the powerhouse of Europe is finally managing to put its manufacturing woes behind it.
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