Financial Trading Blog
Large UK Stocks Showing Strong Momentum
The FTSE 100 is gaining in the second half of this week as investors focus on data amid ongoing political drama, helping some large UK stocks sprint higher. Can the momentum continue?
Ten Large UK Stocks With 14d RSI Over 70
- IG Group (IGG), RSI 86
- AJ Bell (AJBA), RSI 81
- Hiscox (HSX), RSI 80
- Watches of Switzerland (WOSG), RSI 79
- Beazley (BEZG), RSI 76
- Aberdeen (ABDN), RSI 74
- DCC (DCC), RSI 74
- JTC (JTC), RSI 71
- Helios Towers (HTWS), RSI 71
- Intertek (ITRK), RSI 71
Iran Conflict Signals, Data Leave Traders Cautious
The political turmoil in the UK continues, but it is starting to feel like old news to markets as Prime Minister Keir Starmer soldiers on. His main rival, Andy Burnham, has to first get elected in late June before mounting a challenge, so the markets seem to be putting the affair on hold for a bit. This situation has allowed UK stocks to turn positive amid an avalanche of data this week. CPI was cooler than expected but was offset by higher PPI, indicating that the threat of inflation has not gone away. The ILO unemployment rate was also softer. Flash May PMIs not only showed the economy remained resilient but also split: manufacturing improved while services dived. All these developments left the road clearer for the BOE to hold off on rate hikes for now and might even avoid them if the war in the Middle East is resolved soon. However, the market there is processing conflicting signals as US President Donald Trump expresses optimism about a deal while also threatening to resume bombing if Iran doesn't cooperate soon.
Some sectors of the FTSE 100 have benefited from the circumstances, such as energy. But the overall effect of the war on the index has been negative, compounded by persistent political concerns. Improved data has allowed some buoyancy to return, and on Friday, the index is trending higher amid hopes of a deal to open the Strait. Here are some of the large stocks that are contributing to those gains with solid momentum:
IG and AJ: Volatility Aid Trading Firms
The top of the list is led by two trading firms which have benefited from market volatility. IG Group's shares hit a record high on Wednesday, as it reaps the benefits of its recent inclusion in the FTSE 100 and a 16% increase in customers, amid high volatility that is attracting people to the markets. AJ Bell has also seen a surge in customer activity, reporting a week ago that its revenue jumped 19% in the first half of its fiscal year. The company also raised its guidance, citing growing customer numbers and record net inflows. Wealth management firm JTC rounds out an outsized presence of trading companies amid a surge in such firms lately, suggesting the industry sector has growth potential amid global uncertainty.
Calm Growth Amid the Storm: Helios Towers
On the other end of the spectrum, investors looking to avoid geopolitical risk and energy price volatility might turn to utilities, where Helios Towers stands out for its recent growth. The buildout of 5G continues as telecom operators keep investing in new tower sites amid growing data demand. This allowed the company to raise its full-year guidance when it reported earnings earlier in the month, supporting a surge in its stock price. Helios now expects $215-230 million in free cash flow, which has engendered hopes that it will raise its dividend.
FTSE Breaks Upper VWAP
The rise in the Footsie has led to a breakout of the upper VWAP line, which appears aligned with the top trend line of a potential pennant. A push higher could see prices extend toward 10700, while a rejection would suggest a pullback down to the media line near 10300. If that fails, FTSE 1100 coils return to 10K, given that the 10120 VWAP support gives way to bears.
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