FTSE lifted on a rise in oil, knocking on the doors of R2 ahead of the 7000 handle

• The UK’s FTSE was taken off its retail sector lows on Thursday when oil rallied, leading the index into a positive close for the day.
• The top flight index was adding 0.52% or 36.24 points to 6,942.87.
• WTI capped at the 50-D SMA, daily doji in the making

As we move towards the final hours on Wall Street, casting minds over to European markets, UK shares were weighed earlier due to poor updates from the likes of Marks & Spencer, Tesco and Halfords – (Marks & Spencer ended lower even after maintaining full-year guidance, although the retailer did post a 3.9% decline in third-quarter group total revenue to £3.04bn).

However, oil climbed higher on Thursday helping the index along and also a softer pound sterling helped the FTSE recover after British secretary of state for business Greg Clark cautioned that crashing out of the European trading bloc without a deal would be a “disaster” for the UK. Clark, who was speaking on BBC radio argued that there was no majority in parliament for a no-deal Brexit. At the start of the day, the markets were cautious over the failed US government shutdown talks and the lower-than-expected Chinese inflation data overnight.

Meanwhile, on the domestic front, the latest figures from the British Retail Consortium and KPMG revealed the worst Christmas for the sector in a decade last month amid worries about Brexit and weak consumer confidence. Sales were flat in December compared to a 1.4% increase in the same month a year before. The end result was marking the worst performance since 2008. “The worst December sales performance in ten years means a challenging start to 2019 for retailers, with business rates set to rise once again this year, and the threat of a no-deal Brexit looming ever larger,” Helen Dickinson, chief executive of the BRC said.  

Best and worst performers

The top three performers in the index were Fresnillo (FRES) 949.60p 3.06%, followed by SSE (SSE) 1,151.50p 2.45% and Intertek Group (ITRK) 5,062.00p 2.18%. The worst performers were BHP Group (BHP) 1,616.60p -5.32%, followed by Burberry Group (BRBY) 1,737.50p -2.93% and Paddy Power Betfair (PPB) 6,621.00p -1.77%.

FTSE levels

The index has added to the consecutive daily gains above the 23.6% retracement Fibo of the early summer 2018 decline. The 50-D SMA and confluence of the daily pivot are now in the rearview mirror, likely to support on pull-backs.  The 7000 psychological level remains in play. The 38.2% Fibo at 7041 guards a run to the 50% Fibo of the same range that is then located at 0.7204. Daily MACD is higher again while RSI still has room to go on the upside.