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The UK Index is comfortably higher, albeit off session’s highs, after turning back from 3-week horizontal resistance. Gains derive from President Trump’s explosive comments on Brexit and the US-UK relationship battering the GBP to deliver a helpful boost to the UK Index ‘s significant international exposure. Positive overnight Chinese trade data (unless you are the US President, of course) and another breather in US-China tariff confrontations is not, however, enough to offset the damage to heavyweight UK Index Resources stocks, dented by a stronger USD which has, in turn, sent oil and metals prices lower. Note defensives leading the UK Index charge, suggesting a more tentative, wait-and-see attitude from investors into the weekend.
Contributors: UK Index +40pts, with positive contributions from AZN (momentum), DGE (momentum, broker upgrade, weaker GBP), HSBA (heavyweight, defensive), BATS/ULVR (weaker GBP, defensive), CPG (breakout), SHP (Takeda shares up in Japan), PRU (rebound) and WPP/FERG (momentum). Pushing in the opposite direction are just Energy and Miners (commodity prices down), most notably BP, BLT and GLEN.
Technicals: The UK 100 has pulled back from a re-test of 3-week resistance at 7705-7715.
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The UK 100 has pulled back from a re-test of 3-week resistance at 7705-7715.
Watch levels: Bullish 7695, Bearish 7670
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
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Prepared by Michael van Dulken, Head of Research