FTSE 100 FALLS BELOW MA5 ON RECESSION FEARS

FTSE 100 futures are currently trading at 7116.8-lower by 1.69% as compared to the previous closing. The contract, however, closed in the positive territory in the last trading session.

In the cash markets, the blue-chip share index dropped 1.41% to 7,148.34 at the time of writing.

The midcap index FTSE 250 was down 1.26% at the time of writing.

The benchmark index dropped today after weak economic data from China raised fears of a global recession.

The yield on the U.K. 10-year gilt dropped below the yield on the U.K. 2-year gilt today for the first time since 2008. According to some investors, this is a sign of approaching recession.

Official data released on Wednesday showed that the Chinese industrial output in July rose at its slowest pace since February 2002.

Stocks of mining giants fell on the news. Antofagasta and BHP lost 2.75% and 2.17% respectively at the time of writing.

Oil major BP dropped 1.97% as crude prices fell today due to weak economic data from Europe and China and a rise in U.S. crude oil inventories.

Standard Chartered lost 1.02% after Bank of America removed the company from its Europe top picks list.

Homebuilders also underperformed today with Taylor Wimpey falling 1.56% and Barratt Developments declining 2.07%.

On the other hand, stocks of insurer Admiral gained 4.7% after the company reported a bigger-than-expected rise in earnings. The insurer posted strong earnings driven by more customers in its U.K. business.

The broad-market index is on track for its worst month since last October after back-to-back monthly gains. The FTSE 100 is down about 5.7% so far this month.

On the technical front, the RSI is currently at 39.78% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the middle line of the Bollinger Bands and is heading downwards.

Overall Bias is Negative and short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

 

Trade Suggestion- Limit Sell at 7125. Take Profit at 7090. Stop Loss at 7143

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