- China Caixin services PMI slips to 51.8
- UK100 erases earlier losses
- Potential breakout confirmation could be a bullish signal
China is continuing its sluggish recovery this year with the latest Caixin services PMI slipping back to 51.8 from 54.1 and well below forecasts.
As we saw in the official survey data last week, it highlights the economy is struggling from both weak internal and external demand.
Measures to support the economy have been limited and targeted so far and there’s little to suggest that approach is going to change in the foreseeable future.
The PMI data may be contributing to the weaker performance in China and Hong Kong overnight and the uninspiring start in Europe.
Confirmation of last week’s breakout in UK100
The chart isn’t offering too many clues either, with early declines erased and the UK100 trading marginally higher on the day.
UK100 Daily
Source – OANDA on Trading View
The index has pulled off its lows over the last couple of weeks after a pretty miserable August but I’m not convinced the last month truly reflects the sentiment in the market going into the end of the year.
It’s seen support this morning around 7,400, as it has on a number of occasions in months gone by after running into resistance yesterday around 7,500.
That could perhaps be viewed as a bullish signal, a confirmation of the break above 7,400 last week, with 7,500 and 7,600 above the next notable areas of technical resistance.
But broadly speaking, this still looks like an index that’s struggling for sustained direction. Perhaps with the end of global monetary tightening almost upon us, the outlook can become clearer which will enable a break in one direction or another.
