ftse dragged by ma concerns and gold slide 1837652016

Thursday’s FTSE 100 sell-off reveals that sentiment may not have stabilised after all in the wake of Wednesday’s Trump shock.

After an eerie calm a day ago, jitters were seen on both sides of the Atlantic as major U.S. stock indices faced renewed volatility.

The VIX Volatility Index, AKA the ‘fear gauge’, also lived up to its name.

It swung 11% into the black at one point having extended Wednesday’s decline by 8% just hours before.

A broad and rekindled trepidation about the economic impact of a Trump administration also linked back to the FTSE’s own particular burden on Thursday.

There was a sharp slide of British American Tobacco and Imperial Brands (formerly Imperial Tobacco) shares.

Just as investors stateside grew wary of AT&T’s deal to buy Time Warner, given President elect Trump’s stated dislike of big corporate tie-ups, BAT’s proposed $47bn buy-out of Reynolds American was also met with a more sceptical eye. BAT shares fell 6%.

Highly-rated precious metals miners, Fresnillo and Randgold Resources also fell, by around 11% apiece, after a rebound of gold from monthly lows fizzled out.

Gold prices have in fact fallen by 6% from early Tuesday highs.

From a technical perspective, blue-chips appear to be continuing the consolidation of their post-Brexit vote rebound.

However, Wednesday’s whipsaw violated a legitimate rising line from August and stopped just short of the lower bound of the summer’s 6618/6782 support/resistance zone, as shown by the hourly chart of LMAX Exchange’s FTSE derivative below.

At the time of writing, it looked like the market was confirming it had filled what is essentially a gap from Wednesday’s volatile comeback.

(The disorderly snap-back on that day came in thin volume over just two hours).

As long as the FTSE’s longer-term rising trend is intact (not shown) aside from the breach in June—investors should only get really worried if lower support at 6618, established in July, gives way.

But in the event of another failed test of the upper bound of support at 6782, traders would need to face the growing risk that the rising line from early August, and lower support at 6618, might no longer hold.

In turn, the viability of the year’s longer-term uptrend, in place since February, would also be called into question.

Focus would then move on to 6586/6513, a consolidation zone in early-July.

In any case, an upper declining trend over the last month (blue) together with the lower ascending line from August (black dotted line) creates a symmetrical triangle.

Completion of the pattern tends to be followed by a breakout, though in principle the jump can be in either direction.

HOURLY CHART

Please click image to enlarge

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.