- The FTSE 100 Index has followed the cue as confidence returns to equities markets following US-EU trade talks amid British economic recovery.
The FTSE 100 Index (INDEXFTSE: UKX) returned from the Bank Holiday to an upbeat start, driven by the US-EU trade deal. The Index was up by 0.7% in the opening hour of trade, recovering from Friday’s decline of 0.15%. Notable large cap stock gainers at the time of writing included IAG (+3.6%), Rolls Royce(+2.6%), GlaxoSmithKline (+1.4%) and BAE Systems (+1.8%). The Index’s top three largest stocks, AstraZeneca (LSE:AZN), HSBC (LSE: HSBA) and Shell (LSE:SHEL) were up by 1.07%, 0.10% and 1.22% respectively.
A de-escalation of the trade tariff war between the US and EU frees up about $1 trillion worth of goods from a harsh business climate and boosts investor confidence in equities markets beyond the two territories. The FTSE 100 Index has gained about 16% from its April lows and its Relative Strength Index (RSI) reading of 64 affirms the bullish momentum which will likely keep action on the ascending trajectory in the near-term.
Investors are also encouraged by recent economic data that showed the UK’s economy grew by 0.7% in the first quarter, exceeding the forecast estimate figure of 0.1%. In addition, Retail Sales grew by 1.2% in April, beating economists’ forecast figure of 0.2%. Also, the Bank of England is expected to continue with its monetary policy easing in the second half of the year. However, it will be careful to diffuse the inflationary pressure that drove the CPI to 3.5% last month.
FTSE 100 Index Prediction
FTSE 100 Index pivots at 8,770 points and action above that level signals control by the buyers. It will likely encounter the first resistance at 8,834 points, but a continued control by the buyers will break above that level and take the action higher to test the second barrier at 8,898.
On the other hand, going below 8,770 will signal control by the sellers. That will likely see the Index find initial support at 7,706 points. Breaking below that level will invalidate the upside narrative, and a stronger downward momentum could extend the decline to test 8,633.
