» » Market Update Thurs 09: Relief Rally – UK Indices in Green: Oil and GBP Hold

Market Update Thurs 09: Relief Rally – UK Indices in Green: Oil and GBP Hold

  • All of the UK indices enjoyed some reprieve from selling today and finished the day in the green with the big caps adding around 1.2% for the FTSE 100 and  1% for the 250  The FTSE 100’s gains mask effects of the 14 names that went ex div today which weigh on the index.  What may prove bullish is the rally of the FTSE100 off its 200 moving average, though volumes were lower today.
  • A 30% bounce in Burford helped the AIM 100 and All-Share add 1.3 and 1% respectively. Burford’s rebuttal of the shorter dossier seems to have given some solace today as did the reputed £4m buy by the CEO and a promise to initiate a buyback. Shorters buying back to cover may also have contributed to today's rise. The 30% rally today still leaves BUR down almost 50% on the week.
  • Better than expected economic data out of China overnight may have helped commodities and indices today though many markets were deeply oversold and due a relief rally.
  • Brent oil’s steep decline over the past 6 trading sessions also took a reprieve adding 0.2% today at the $57.6 level having hit the 2019 low in yesterday’s session. The doji forming on the daily indicates indecision on future direction and may well be an inflection point in the short-term trend although $60 (which was strong support) may now form overhead resistance.
  • As well as oil, copper rallied today while gold pulled back slightly but still remains overall bullish : sustained rallies in the indices may trigger a pullback given the yellow metal has gained $100 in 6 trading  sessions and is stretched to overbought on the daily. Profit taking from short term traders is to be expected and may offer a better buying opportunity.  Iron ore halted its steep decline of late and added 0.22% though remains up 35% YTD.
  •  On currencies, GBP is unchanged against USD while the USD/Yuan remains north of 7 reflecting the ongoing trade tensions
  • Taking a look at sectors , Mining, O&G equipment, Tobacco and Construction were among the 11 sectors gaining over 2% today.
  • In sentiment, the US VIX has dropped back by almost 25% to below 18 having briefly touched 25 over the past few days suggesting many traders are taking protection off. The Fear & Greed index has remained at 25 on Extreme Fear. In the UK, of the 1407 stocks covered 443 rallied while 547 sold-off with 417 unchanged.
  • Both the FTSE 100 and FTSE 250 are 50% bearish with half of their constituents below their 200MA while the AIM All-Share remains the most bearish with 62% of its names below the 200.
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