FTSE 100, Coronavirus Vaccinations, UK Lockdown, European Open – Talking Points:
- Equity markets continued to rally during the APAC session as investors cheered vaccination progress.
- The UK’s rapid rate of inoculations may underpin regional risk assets.
- FTSE 100 eyeing yearly highs after clearing key resistance.
Equity markets continued to trudge higher during Asia-Pacific trade as progress in the distribution of coronavirus vaccines, and falling infection numbers globally, underpinned market sentiment. Australia’s ASX 200 climbed 0.7%, as the RBA reiterated its commitment to keep interest rates low for the foreseeable future, and Victoria – the nation’s second-most populous state – looks set to emerge from a 5-day snap lockdown on Wednesday.
Japan’s Nikkei 225 surged over 1.2% while Hong Kong’s Hang Seng Index stormed 1.7% higher. In FX markets, the British Pound, New Zealand Dollar and Norwegian Krone largely outperformed while the haven-associated US Dollar and Japanese Yen lost ground. Gold and silver prices crept higher despite yields on US 10-year Treasuries climbing to their highest levels since March of 2020.
Looking ahead, the Euro-area’s Q4 GDP release headlines the economic docket alongside economic sentiment out of Germany.
Finance Prop Economic Calendar
Possible Easing of Restrictions to Buoy FTSE 100
The United Kingdom’s delivery of one of the most successful vaccination programs globally looks set to push the benchmark FTSE 100 index higher in the coming weeks. More than 22% of the population has received at least one shot of a coronavirus vaccine, with England achieving its target of immunizing its top four priority groups by February 15.
Covid-19 infections have also drastically declined in recent weeks, with the 7-day moving average tracking case numbers falling to 12,580, after peaking at 59,600 on January 9. These figures suggest that the restrictions imposed to stem the virus are having a marked impact and is putting pressure on Prime Minister Boris Johnson to start easing curbs sooner rather than later.
Sources – Worldometer, OurWorldinData
Indeed, the government is scheduled to outline its plans for relaxing current restriction on February 22. However, it seems relatively unlikely that an aggressive rollback of measures will come to pass. Foreign Secretary Dominic Raab warned that “we do need to be very careful in how we proceed”, adding that “we have made good progress [but] we don’t want to see that unravel because we go too far”.
Nevertheless, promising progress in health outcomes will likely buoy market sentiment in the near term and could pave the way for the FTSE 100 to retest the yearly high set in early January.
FTSE 100 Futures Daily Chart – Eyeing a Retest of the Yearly High
From a technical perspective, the FTSE 100 looks set to extend its recent push higher as price storms above psychological resistance at 6700.
With price tracking firmly above all six moving averages, and the RSI climbing into bullish territory above 60, the path of least resistance seems to favour the upside.
A daily close above the Pitchfork 50% line and 6800 is likely required to carve a path for buyers to retest the yearly high (6964). Hurdling that opens the door for buyers to challenge confluent resistance at the Pitchfork parallel and 100% Fibonacci expansion (7222).
However, if 6800 remains intact, price could slide back towards the 8-EMA (6642) and 23.6% Fibonacci (6615).
FTSE 100 futures daily chart created using Tradingview
— Written by Daniel Moss, Analyst for Finance Prop
Follow me on Twitter @DanielGMoss
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