FTSE 100 rally accelerates after strong BP earnings

American stocks are set to open higher as investors look for further corporate earnings from the likes of Marriott International, ConocoPhilips and KKR. In general, this earning season has been relatively successful, with most companies releasing results that beat consensus estimates Still, there are concerns about China, which has been on a major technology crackdown recently. Today, shares of Tencent plummeted by more than 10% after a state-owned paper accused gaming companies of having a negative impact on children. Therefore, there is a possibility that the Communist Party of China will intervene and crackdown on the industry.

European stocks rose after the relatively strong results. In the UK, the FTSE 100 index rose by 0.50% after strong earnings by BP. The supermajor reported a profit of more than $2 billion and announced that it will increase its dividends and share buybacks. It also pledged to increase its dividend by 4% per year in the next five years as long as oil price was above $60. Meanwhile, in France, the CAC 40 index rose by almost 1% after Societe Generale reported a net income of more than 1.44 billion euros in the second quarter. At the same time, foreigners are still interested in UK companies. On Monday, an American company made a $8.8 billion bid for Meggitt. 

Cryptocurrency prices retreated as investors reflected on the new proposals by senate negotiators to tax digital transactions. The bill proposes to expand the definition of exchanges or brokerages to refer to exchanges like Coinbase and Kraken. It is too early to predict whether these proposals will be passed in a divided congress. The price of Bitcoin declined to $38,598, which was substantially lower than this week’s high of more than $42,000. Other altcoins like Ether and Cardano also declined.

BTC/USD

The BTCUSD pair declined to 37,962, which was lower than this week’s high of 41,660. On the four-hour chart, the pair moved below the 25-day and 15-day moving averages (MA). The price has also formed a small head and shoulders pattern while the MACD and Relative Strength Index (RSI) have been on a downward trend. Therefore, while the overall trend is bullish, there is a possibility that the pair will decline further from here.

EUR/USD

The EURUSD pair was little changed since there was no major economic data from the US and UK today. It is trading at 1.1881, which is slightly below this week’s high of 1.1908. On the four-hour chart, the pair has moved above the 25-day moving average. It is also above the upper side of the falling wedge pattern while the Relative Strength Index (RSI) has moved close to the overbought level. Therefore, the pair will likely resume the upward trend, with the next key target being at 1.1950.

UK 100

The FTSE 100 index rose to a high of £7,105 after the strong results by BP. On the four-hour chart, the pair moved above the 61.8% Fibonacci retracement level. It also moved slightly above the 25-day moving average. The MACD is also slightly above the neutral level. It is also along the upper side of the ascending trendline. Therefore, the index will likely maintain the bullish trend with the next key target being at £7,500.