The FTSE 100 is in the red today as investors focus on the rising tensions between the US and China. The index is down by 0.40% and is trading at £6,100, which is within the range it has been since yesterday. The FTSE is not alone. Other indices like the DAX index, CAC 40, and Stoxx 50 are down by 0.40%, 0.35%, and 0.30%, respectively.
US-China relationship is the biggest concern
The biggest concern for the FTSE 100 index and other indices is the relationship between the US and China. Yesterday, the US government unveiled a so-called nuclear option on Huawei, the giant telecommunication company.
In the statement, the commerce department warned companies against supplying the company with vital chips. Analysts who talked to CNBC said that the new rule was so strict that it posed existential threat to the company. As such, they expect that China will respond and escalate the tensions.
The FTSE 100 is also falling because of the UK’s plan to phase out wage support programs. Also, it is falling because of the sixth round of Brexit talks that will resume today. Analysts are waiting to see whether the two sides will make any progress in the ongoing talks. The other five rounds of talks have not yielded any results.
Brexit is an important issue for companies in the FTSE 100 because most of them do a lot of business with the European Union. A good example of this is Rolls Royce, which does a lot of business with Airbus, which is a European airline manufacturer.
The FTSE 100 index is also falling because of the stronger British pound. The GBPUSD pair has climbed by more than 0.30% while the EURGBP has dropped by 0.25%.
Top movers in the FTSE 100
Most companies in the FTSE are in the red today. Among the worst performers are Rightmove, BHP Group, Standard Chartered, Rolls Royce Holdings, and Melrose Industries. These shares have dropped by more than 1%. On the other hand, the best performers in the FTSE are Persimmon, Barratt Developments, Taylor Wimpey, and Ocado.
FTSE 100 forecast
The daily chart shows that the FTSE 100 index has been moving in a sideways direction. The index is trading at £6,100, which is in the same range it was yesterday. The chart also shows that the index has been moving in a sideways channel, as evidenced by the two black lines. It is also slightly below the 100-day and 50-day EMA. Its volatility, as measured by the Average True Range (ATR) has been falling.
Therefore, the outlook for the FTSE 100 at this point is neutral, with the key levels to watch being the support and resistance at £5,865 and £6,350
FTSE technical chart