The FTSE Finish Line - July 11 - 2023
Employment Data Boosts Sterling, Further BoE Action Weighs On FTSE
The FTSE is hugging the flatline into the close of Tuesday’s trading, the UK’s blue chip index continues to test pivotal support in the 7250 region. The export heavy index was weighed by a stronger Sterling today this was somewhat countered by another strong showing from the miners as metal prices remained well supported, as precious metals miners index was up over 1.2% with AnlgoAmerican leading the charge in the group gaining 1.78% on the day additional support for the sector came as the People's Bank of China (PBoC) announced that it is extending policies related to support for the real estate actor until the end of 2024. It is a real estate firm that sits at the of the index today Land Securities is up over 3% on the session after the commercial real estate firm maintained a positive outlook, citing strong operational momentum even in the face of ongoing economic uncertainty. On the negative side of the ledger shares of medical products firm Convatec are down 1.7% on the session and leaves them at the bottom spot on the index today closely followed by Rentokill who slid 1.67%.
On the fundamental front the bid behind Sterling was driven by the UK employment report for the March to May period indicating some changes in the employment landscape. The unemployment rate unexpectedly increased to 4.0% from the previous three-month period's rate of 3.8%. This rise was higher than market consensus, which anticipated an unchanged rate of 3.8%. Additionally, the number of unemployed individuals reached its highest level since 2021, surpassing the pre-pandemic level. Interestingly, despite the increase in the unemployment rate, the report also noted a rise of 102,000 in the number of employed individuals during the three months leading up to May. Therefore, the increase in unemployment can be attributed more to a shift of people from inactivity to actively participating in the employment market, either by working or actively seeking work, rather than companies laying off workers. The appreciation of the Sterling today can be attributed to the release of official figures confirming robust wage growth in the UK. According to the data, wages excluding bonuses increased by 7.3% in the three months leading up to May compared to the same period the previous year. This growth rate matches the highest recorded growth in wages. Such strong wage growth adds further pressure to the Bank of England's (BoE) concerns regarding inflation as markets are now pricing a potential 50bps move at the BoE’s next meeting
FTSE Intraday Bullish Above Bearish below 7400
Above 7550 opens 7660
Primary resistance is 7600
Primary objective 7193
20 Day VWAP bearish, 5 Day VWAP bearish
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!