Investors are set for a trading day lacking any clear direction as most financial places around the world will be closed for Labour Day. However, there remains considerable volatility on UK stocks, which have had many drivers to shake their prices recently. From the reassuring news on the virus front to the mixed picture provided by corporate results, investors have had a lot to digest in the last 24 hours. Nonetheless, UK stocks traders have been surprised after Shell, in whom two thirds of UK equity income funds have a holding, decided to cut its dividend for the first time since WW2. Even though the collapse in the oil price and the bleak demand outlook posed by the coronavirus outbreak are well-known, this decision has sparked fresh concerns to income investors. BP on the other hand chose to maintain its dividends payment, a move that raises concerns that by focusing on the short-term need to repay investors, the company may weaken its position to tackle the long-term challenge posed by historically low oil prices and this could significantly impact its results on the long run. Income investors’ concerns would not be as acute if dividends cuts were only related to the energy sector but even companies posting profits like supermarkets (Sainsbury, Tesco, Waitrose etc..) are reducing pay-outs. In these uncertain times, where it is hard to get a clear picture of the economic outlook, companies are choosing to hold as much cash as possible to be able to face any potential further downturn.
The FTSE-100 Index is trading lower today with the price falling through its bullish dynamic support. This break-out is confirmed by the Stochastic indicator and this could lead prices back to the 5,670pts support zone on a short-term basis. A return above 5,875pts would invalidate the current bearish break-out.
While a student, Pierre Veyret had a passion for the financial markets. At the time, he studied International Trade through the setting up of import / export operations and it was the techniques of hedging against exchange rate risks that helped him to make the link with the financial markets, and all especially that of Forex. It is therefore with the aim of anticipating the price of currencies several months in advance that Pierre quickly turned to different methods of analysis by drawing inspiration and surrounding himself with experts in the field. Shortly after, Pierre decided to specialize in Technical Analysis, a discipline he had the opportunity to practice with real market professionals, thanks to AFATE / IFTA, an association of which he has been an active member for several years. Pierre Veyret is passionate about the field of the financial industry with a particular interest in the various techniques of stock market forecasting. Currently, Pierre is based in the City of London where he works as Chief Analyst. He performs regular interventions on a multitude of asset classes through various media (television, internet and print media).
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© 2019 High Leverage FX - All Rights Reserved.