KEY TALKING POINTS:
Improving economic information is visiting bond yields rise and putting pressure on demographics
The FTSE 100 is trapped under key immunity as buyers struggle to maintain the positive momentum going
Continued strong financial data and outlook in the united states are pushing European equities higher despite the impending threat of a third wave of Covid-19 instances in Europe. A strong rise in consumer confidence released yesterday has been the latest of a plethora of powerful data being released in the US, which can be, in turn, raising inflation expectations and bond yields.
The most recent ADP employment reading will be released this afternoon and expectations are for a increase in employment in the month of March, which could then observe the US 10 year bond return push over 1.8percent for the first time since February 2020. If so, equity markets can come under pressure in the united states, probably spilling into European stocks, so anticipate a slightly weaker end to this week.
FTSE 100 LEVELS
The FTSE 100 has fought to keep up with the favorable momentum found in Europe this week as the indicator continues to trade below the 6,800 immunity line. It's been unable to absorb the bullish spill-over from the US but is quickly becoming sensitive to the correction in equity markets because last night, therefore downside risks are more prominent at present.
The last reading for Q4 GDP premiered this afternoon and it may have spared the FTSE 100 from further losses as the statistics revealed the UK market grew 1.3percent in the past 3 weeks of 2020, coming in greater than the 1 percent anticipated and avoiding a double-dip downturn.
The ascending trendline from the January 2021 lows is maintaining buyers encouraged in the meantime, using short-term resistance found at 6,656, where the 200-day SMA converges. More instant support can be found at this week's swing low (6,730).
To the topside, the 6,800 immunity continues to offer strong selling pressure so there it's likely that the index will require dip buyers to look within a greater retracement to get above this region. A fall towards 6,600 -- or even the 61.8% Fibonacci retracement in 6,489 -- would be a good opportunity for new buyers to bring the indicator higher, even though a break above 6,810 is needed to combine further bullish momentum. Any farther than that and also the 76.4% Fibonacci at 6,894 is likely to be another barrier for buyers.