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FTSE 100, Investors Disappointed by ECB Plans

1/25/2023 1:35 PM

The leading index of the London Stock Exchange FTSE 100 shows corrective dynamics and is now at 7768.0. 

The UK stock market is correcting downwards against the background of recent statements by the head of the European Central Bank (ECB) Christine Lagarde, who noted that the regulator will do everything possible to return the inflation rate to 2.0%, hinting at a significant tightening of monetary policy at the next meetings. The head of the Central Bank of the Netherlands, Klaas Knot, also agrees that the interest rate will be raised on February 2. The official said that he supports the planned adjustments by 50.0 basis points at the two upcoming ECB meetings.

There are minimal changes in the corporate segment, however, Associated British Foods should be singled out, which recently reported a 16.0% increase in quarterly revenue compared to the same period a year earlier. The positive dynamics was influenced by increased consumer demand in the last 3 months, which was associated with holiday sales.

The relative pressure on stock asset quotes is exerted by bonds, which are growing moderately. Thus, popular 10-year securities are traded at a rate of 3.316%, rising by 1.13%, and long-term 20-year ones – at a rate of 3.737%, increasing by 1.26%. As for global 30-year bonds, their yield is at 3.670%, which is 1.26% higher than yesterday's trading. 

Among the growth leaders in the index at the moment are Rolls-Royce Holdings Plc. (+2.96%), Scottish Mortgage Investment Trust Plc. (+2.49%), International Consolidated Airlines Group, S.A. (+2.43%).

Among the companies demonstrating downward dynamics, Just Eat can be distinguished (-4.03%), AstraZeneca Plc. (-2.97%), Hikma Pharmaceuticals Plc. (-2.80%).

On the daily chart, the index quotes continue their corrective growth and are held in the middle of the ascending channel.

Technical indicators are in the state of a buy signal and so far exclude the possibility of a deep downward correction: the range of EMA fluctuations of the alligator indicator continues to be quite wide, and the histogram of the AO oscillator forms correction bars while in the buy zone.

Support levels: 7720.0, 7626.0. | Resistance levels: 7860.0, 8000.0.

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