European closing: FTSE made a two-year low on Huawei arrest, closed at 6,704.05 -3.15%

  • The UK FTSE 100 dropped to a two-year low
  • The arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies sent the FTSE 100 down 2.3% at 6,760.28, hitting its lowest level since December 2016 by midday.
  • The FTSE has closed at 6704.05 -3.15%.

The UK FTSE 100 dropped to a two-year low just before midday on Thursday, tied in with the broad-based market selloff that has roiled markets and sparked trade war fears once again over the arrest of Huawei's chief financial officer.

Sino/US trade relations continue to drive markets and just in the same week as it might have appeared that Trump and Xi had started to work on a solution to their year-long trade dispute, as ambiguous as the cease-fire was, cannons are being positioned forward once again. 

The arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies, by the Canadian authorities sent equities off a cliff and futures selling was so intense at one point that circuit breakers were triggered.

The impact sent the FTSE 100 down 2.3% at 6,760.28, hitting its lowest level since December 2016, with only five companies' shares in positive territory. (FTSE 250 was 2.8% lower at 17,769.11).

The straw that broke the camel's back

The chief financial officer of Chinese telecoms company faces extradition to the US over possible violations of sanctions against Iran and China has urged both Canada and the US to "rectify wrongdoing" which has markets to a cliff edge again on Thursday as investors fear that this will break the cease-fire as Beijing responds with demands that may come  beyond the realms of tariffs and into much broader economic and diplomatic conflict, with dire implications for global economic growth.

FTSE technicals

The FTSE is deeper negative on the charts with a series of long-bodied candlesticks. The index is now testing S2 at 6665 with daily ATR steepening into a strong trend. RSI is barely into over sold territory with room to go as well. A break of S2 6550 and 6500 at Nov 4th 2016 lows a few points higher. On the flipside, the pivot point is located at 7017 - 7016 was a prior low. R1 is located at 7074 and the 2018 range 23.6% level is located at 7100. The 38.2% Fibo of 2018's range at 7262 is the primary objective thereafter.

 

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