Chinese data overnight is going some way to boost optimism. Profits at Chinese factories fell at a slower pace in April, aided by a pick-up in automobiles and electronics. Factory profits slipped by -4.3% in April, a huge improvement from March’s -35% decline.
These are tentative signs that China is reigniting its engine and demand is slower returning. However, no quick bounce back is on the cards here. The damage caused by coronavirus to the economy is expected to keep the economy and businesses under pressure for the rest of the year.
Vaccine news continues to offer support to sentiment. Inovio has become the latest to join the list of firms reporting progress in its efforts to find an immunisation for covid-19. Inovio joins Novavax, Moderna, Oxford University and others which are progressing towards a vaccine which would enable a rapid recovery to pre-virus levels
The mixed picture painted from vaccine optimism, from cautiously encouraging Chinese data and concerns over US -Chinese tensions is setting the scene for a mixed session. European and US futures are pointing to a mildly stronger start on the open. The US Dollar is pulling safe have bids, the traditional safe haven gold is slipping lower for a third straight session, finding support at $1700.
Oil fails to break $35
Oil is also pulling lower on Wednesday, after gaining just shy of 4.5% across the past two sessions, although failing to test resistance at $35. WTI is currently down 0.7% highlighting the fragility of its recovery.
In the US we are heading into peak demand season just as states are easing lock down restrictions and reopening. New York, is expected to reopen in June. Even so, demand across the year is expected to be down around 30% as people stay close to home. Souring US – Chinese relations are also bringing a negative tone to oil trading.
The FTSE is set to open 0.7% higher on the open around 6110. It trades above its 20 & 50 sma on 4 hour chart, a bullish sign.
Immediate support can be seen at 6045 (overnight low) and 5890 (low 22nd May) and 5660 (low 14th May).
Immediate resistance can be seen at 6168 (yesterday’s high), 6210 (high 12th April) and 6459 )high 6th March)