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FTSE 100 Drops 1% – These are the Key Support Levels?

The FTSE 100 was 1% lower on the day as the U.K. comes under pressure to enforce further lockdown measures. Upbeat earnings saw the index break a three-day selling streak yesterday but this morning sees the FTSE on the backfoot.

Oil major Royal Dutch Shell jumped yesterday and was up over 3.6% in early Friday trading after the company posted higher-than-expected quarterly profits and also raised its dividend. Lloyds Banking Group was also higher after beating quarterly profit expectations, which was assisted by a rise in mortgage lending.

A rebound in the U.S. dollar has hit commodities this week and that has caused losses in the FTSE mining companies. U.S. crude oil was trading as low as $35 yesterday, while Brent hit $37. The ongoing lockdowns in Europe are causing markets to lower their demand expectations for commodities as the fragile global recovery comes under threat once more. U.K. Prime Minister Boris Johnson is now under pressure to drop his tiered lockdown system for the full lockdown as the French have done.

Brexit talks are still ongoing and EU Commission President Ursula Von Leyen noted that fishing was still an obstacle, saying: “We are making good progress but the two critical issues, level playing field, and fisheries, there we would like to see more progress”. She did however say that they were deep in the process of constructing a system that allows, “…the UK to have access to the single market that is tariff-free and quota-free”.

FTSE 100 Technical Outlook

The FTSE 100 has fallen through a key level at 5785 and has found buyers at the 5515 level. If this holds today we could see a small bounce into next week. A move lower would target the 5350 support level with the March lows coming in around 4800-5000. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.      

FTSE 100 Daily Chart