FTSE 100 Chokes Ahead of Earnings – NatWest, HSBC, Lloyds Lead

The FTSE 100 is down for the second straight day as investors continue worry about the rising number of Covid-19 cases in the UK. They are also waiting for important corporate earnings from companies like Rentokil, Aviva, Legal & General, Relx, and the London Stock Exchange (LSE).

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NAS100

NAS100 (11325)

In Profit

STOP

SELL

TP1

11478

TP2

11338

UK stocks are not the only ones falling today. In Germany, the DAX index has fallen by more than 1% while in France, the CAC 40 index has declined 0.65%. The pan-European Stoxx 50 index has declined by 0.75%.

The biggest contributor to the weak performance of the FTSE is the rising number of Covid cases in the UK. According to the National Health Service (NHS), more than 26,000 new cases yesterday. That brought the total number of cases to more than 789k. More than 44k people have died from the disease. As a result, the UK has announced travel restrictions in several cities, including London, which is a bad thing for companies in the FTSE.

As I wrote yesterday, investors are also worried about the rising public debt in the UK. Data from the Office of National Statistics (ONS) showed that the economy added more than £35 billion in debt in September. That pushed the total debt to more than £2 trillion, which Moody’s has warned will have a negative impact on the economy.

The FTSE 100 is also waiting for a speech by Andrew Bailey, the Bank of England (BOE) governor. In his statement, he is expected to warn about the state of the economy and highlight what he intends to do. Analysts believe that the bank will slash rates and tweak its asset purchases program.

Meanwhile, investors are waiting for earnings from UK companies like the LSE and Aviva. Strong earnings could push the FTSE 100 higher. Similarly, UK stocks are falling ahead of earnings from companies like Intel, Coca-Cola, AT&T, and Danaher.

The best-performing stocks in the FTSE are Hargreaves Lansdown, GVC Holdings, Avast, and Rentokil. Banks like Barclays, HSBC, NatWest, Lloyds, and Standard Chartered have also gained. On the other hand, the biggest laggards in the FTSE are BAE Systems, British Airways, British Land, and Burberry Group.

FTSE 100 technical analysis

The daily chart shows that the FTSE 100 has been in a slow downward trend since June 9, when it reached a high of £6510. Today, it reached a low of £5750, which is between the descending channel shown in red. The price has also moved below the 15-day and 25-day exponential moving averages and below the 38.2% Fibonacci retracement level.

Therefore, I suspect that the index will remain under pressure as bulls aim for the support at £5500. However, a move above the resistance level of £6,000 will invalidate this trend.

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FTSE 100 technical chart

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