The FTSE Finish Line - July 19 - 2023
Inflation Flops FTSE Flies
FTSE 100 index is up 2.1% as UK housebuilders and property firms experienced significant gains as inflation slowed sharply in the country. The UK housebuilders' index surged by 6.4%, on track for its best day since November 2008. The housing index rose sharply for the second consecutive day. The FTSE Real Estate index, which includes commercial property firms and real estate investment trusts (REITs), also jumped by 5.3%, heading for its best day since February 2.
British inflation in June fell more than expected, reaching its slowest pace in over a year at 7.9%. This easing of inflationary pressures relieved some of the pressure on the Bank of England to continue raising interest rates sharply. As expectations grew that UK rates might peak sooner than initially feared, the housing index gained about 4% on Tuesday. FTSE 100 homebuilder Persimmon was the top percentage gainer in the index, rising by 9.8%. Barratt and Taylor Wimpey saw gains of 5.7% and 6.7%, respectively. All 28 constituents currently trading on the Real Estate index saw gains. Among commercial property firms, Segro and Land Securities were among the top percentage gainers on the FTSE 100, rising by approximately 6% and 5%, respectively. The strong performance of housebuilders and property firms was driven by the significant slowdown in inflation, signalling the potential for a sooner-than-expected peak in interest rates in the UK.
On the negative side of a mainly positive ledger sits shares of Chilean miner Antofagasta, declining by as much as 3.4% taking the bottom spot on the day. The company revised its full-year copper production forecast, lowering it to a range of 640,000-670,000 metric tons from the previous estimate of 670,000-710,000 metric tons. This adjustment was due to persistent water shortages caused by drought conditions in Chile. Antofagasta reported a 10% increase in copper production to 295,500 metric tons for the first half of the year. The company, however, maintained its capital expenditure outlook for the fiscal year at $1.9 billion. Analysts at Citi noted that the reduced copper production forecast for full-year 2023 could weigh on consensus estimates. Year-to-date, Antofagasta's stock has declined by 2.5%.
FTSE Intraday Bullish Above Bearish below 7500
Below 7390 opens 7260
Primary support is 7400
Primary objective 7700
20 Day VWAP bearish, 5 Day VWAP bullish
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!