By Michael Baker
The UK 100 saw a strong sell-off on the 8 am London open after mulling over a mixed bag of news. Overnight we saw a positive release from Apple but traders seem to be ignoring this and focusing on reports that the US is set to hike the import tariff. Reports overnight (Bloomberg) have suggested that the current rate of 10% charged on Chinese imports may be changed to 25%. Stocks have reacted negatively at the prospect that these latest measures will hit the Chinese economy.
With tonight’s Federal Open Market Committee (FOMC) meeting set to prove uneventful, tomorrows Bank of England announcement may see policy action in the form of a rate hike seeing borrowing costs increase. Elsewhere, UK manufacturing saw its lowest reading in 3 months with increasing signs firms are getting worried about Brexit. Although the reading is low, it is unlikely to deter the Bank of England as manufacturing accounts for less than 10% of GDP. All eyes will be on the services reading due out this Friday, August 3rd, at 9:30 AM BST.
UK100 chart has shown signs of a breakdown approaching the 50% fib (7635) from the June low to the July high. This morning’s aggressive selling saw the index drop by 116 points.
UK100 4-hourly Chart – Market Trading To The Downside
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