FTSE 100 Declines on Weak Chinese Figures
31 May 2023
Weak Chinese activity figures and declining company confidence caused the FTSE 100 to decline
The mood was negatively impacted by disappointing Chinese activity statistics and declining U.K. business confidence as U.K. stock markets traded lower on Wednesday.
The benchmark FTSE 100 index was down 0.2%, the mid-cap FTSE 250 was down 0.4%, and the overall FTSE 350 was down 0.4% as of 04:15 ET (08:15 GMT).
Data made public earlier on Wednesday revealed that the crucial Chinese manufacturing sector, a key driver of regional growth, contracted in May, declining for the second consecutive month.
This suggested that the recovery observed earlier in the year after the second-largest economy in the world was released from its harsh COVID restrictions had slowed down, with growth weakening in a key export market for European businesses.
May saw the first downturn in business sentiment among British companies in three months, with the Lloyds Bank Business Barometer dropping to 28% from 33%, its highest level since February.
“The UK has avoided an outright contraction in GDP, indicating a certain amount of underlying resilience in the economy,” said Hann-Ju Ho, senior economist at Lloyds Bank.
The recent 24-hour strike by the railway drivers’ union ASLEF that began earlier today is the latest in a string of industrial actions that have negatively impacted the U.K. industry.
In the context of a protracted disagreement between the unions and the government over wages, job losses, and working conditions, additional industrial action is scheduled for Saturday.
FTSE 100 is currently trading in the down channel.
FTSE 100 TECHNICAL ANALYSIS DAILY CHART:
FTSE 100 is currently trading below 20&50 SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting a downtrend.
Immediate resistance is at 7542.1 & its immediate support level is 7501.5
HOW TO FTSE 100 IN THIS WEEK
After initially gaining to the upside, the FTSE 100 briefly fell and then started trading downward. The FTSE 100 had already broken its key supports, and today it has broken its previous day’s low and is trading at a key support zone; if this zone is breached, further fall is expected.