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FTSE 100 Slides On China, ISM and ADP on Tap

FTSE 100 Slides On China, ISM and ADP on Tap

2016-01-06 10:56:00
Alejandro Zambrano, Market Analyst
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Talking Points

  • The FTSE 100 slides in line with Europe on soft Chinese data and the news that North Korea has announced the testing of a hydrogen bomb
  • Data which may tilt the favor of the bullish traders is U.S. ISM Non-Manufacturing and U.S. ADP

The FTSE 100 is lower this morning, as is much of Europe, following the publication of the soft Caixin China PMI Services overnight. The index slipped to 50.2 from 51.2 and this coupled with the Caixin China PMI Manufacturing reading on Monday (48.2 vs. the est. 48.9), suggests that China is continuing to struggle. Data out of the U.S. has also been soft with the ISM Mfg. printing 48.2 vs. the 49 expected. With this in mind, there is little reason to expect a major rally on the FTSE 100 at this point.

Also adding to the bearish bias this morning is North Korea, which announced that it had tested a hydrogen bomb, the news coming after tremors at a magnitude of 5.1 were detected near the Punggye-ri nuclear test site.

Technical Outlook

The short-term trend is bearish below yesterday’s high of 6169 and price may try to reach the December 18 low of 5995. On a successful break to that low, the FTSE 100 may reach the December 14 low of 5858 over the next few weeks.

For the short-term trend to turn bullish, price would need to break yesterday’s high of 6169 and if this happens the price may reach the December 29 high of 6319.

How do you know if a trade is good or not? You could use the risk-reward ratio as outlined in the The Traits of Successful Traders Guide.

U.S. ISM Non-Manufacturing and U.S. ADP

The data on tap today which may calm stock markets consists of both the U.S. ISM Non-Manufacturing and U.S. ADP. Whilst more data is on tap, these two indicators remain the novelty today. See our economic calendar.

The ISM Non-Manufacturing would probably need beat 56 expected, and the same is true of the ADP, which is expected to print 198k in seeking the FTSE 100 traders.

The expected outcomes in this report have been sourced from Bloomberg News.

FTSE 100 (UK100)

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00

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