The FTSE 100 dropped 1% to 6,901.39 on global growth concerns and strong sterling

• UK shares were pressured on a strong performance in sterling following an upbeat set of employment numbers mingled and despite the optimism that parliament will prevent a no deal Brexit.
• The FTSE 100 dropped 1% to 6,901.39.
• Cable climbed 0.6% to 1.2966 in London.

The dominating theme in markets is global growth concerns, weighing on risk appetite and global equity prices. However, the pound staged another impressive rally on Tuesday with the BoE theme back in vogue following impressive UK data that has bucked the trend of rather subdued economic activity. The number of people in work rose by 141,000 over the September-November period, relative to the previous three months. Having been virtually flat over the course of last summer, employment growth has shown greater momentum over the past couple of months. Inflationary pressures, when taking in to account the wages growth, brings back the prospects of a hike by the BoE, supporting the case for higher sterling, especially on the sentiment of a soft Brexit and an extension of Article 50 at this juncture. "Regular pay growth matched last month’s post-crisis high of 3.3%. This again emphasises that firms are having to lift wages increasingly rapidly to retain and attract talent," analysts at ING Bank wrote. 

Brexit delay bill would likely be approved by lawmakers

Analysts at Rabobank explained that a Brexit delay bill has been proposed by a cross-party group of MPs and would extend Article 50 if a deal was not in place by the end of February. "While this would remove the prospect of a hard Brexit, plenty of political uncertainty remains in the UK and this suggests that the coming week or so could be another rocky ride for market sentiment...If it is approved by lawmakers on January 29th, a proposal led by Tory MP Boles and Labour’s Cooper would force PM May to extend Article 50 if she was unsuccessful in finding sufficient parliamentary backing for her Plan B by the end of the next month.   May has been warned that is she were to attempt to block her ministers from supporting this bill, several could resign.  From the perspective of GBP investors, this would remove the most bearish scenario from the table – at least for now.  However, it doesn’t solve the issue of finding a compromise Brexit deal that would provide businesses with the certainty that they need. ”

Best and worst

In corporate news, Wood Group was the worst performer due to Exane's downgrade of the stock amid concerns over its accounting. Evraz (EVR) 447.60p -3.49% followed in the top three losers ahead of GVC Holdings (GVC) 689.50p -3.02%.On the flipside, EasyJet was the top performer, reporting a 14% jump in total revenue, a 20% rise in ancillary revenue and a 12% increase in passenger numbers for the first quarter. Ocado Group (OCDO) 914.40p 3.25% followed and Kingfisher (KGF) 222.80p 2.34% came in thereafter. 

FTSE levels

The bullish wave has been abruptly ended by the latest price action that has seen the index plummet to below daily pivot points and S3 at 6913, opening a test of the 50-D SMA located at 6869 and prospects for a test of the 23.6% retracement fibo of the late May 2018 decline targeting 6797 fractal 16th Jan swing low. However, there is a series of supportive lows at the Fibo which could prove a tough nut to crack.