The FTSE 100 index is up by more than 1%, continuing the gains made yesterday. The index has soared to £5,900, which is the highest it has been since Tuesday. It is following in the steps of Wall Street, where the main indices rose by more than 0.50%. Other European bourses have also extended their rallies, with the DAX index and CAC 40 rising by more than 1%.
The FTSE 100 is rising partly because of the weaker British pound. The currency is off by 0.30% against the dollar as traders react to COVID-related news. In a statement yesterday, Boris Johnson said that the government would implement new circuit-breaking rules to slow the spreading of the disease.
The new rules include encouraging more people to work from home and to restrict the operating hours of all bars. Also, the number of wedding and funeral guests will be limited.
As such, the FTSE 100 is rising because the UK government has not reimposed a total lockdown as some experts were demanding.
The UK confirmed more than 4,900 cases yesterday, a day after it reported more than 4,300 cases.
Most companies in the FTSE 100 are in the green. The best-performers are 3i Group, Burberry, and JD Sports, whose shares are up by more than 3%. JD Sports is likely gaining because of the Nike earnings, which showed that the company’s online sales increased sharply in the second quarter. Notably, Rolls Royce share price is up by more than 1%.
On the other hand, Fresnillo, Rio Tinto, Polymetal, Anglo American, and Glencore are among the worst performers because of the weak performance of commodities. Indeed, gold, silver, and copper are down by more than 1% today.
FTSE 100 technical analysis
The FTSE 100 index is trading at £5,900. On the daily chart, this price is along the 38.2% Fibonacci retracement level. It is also below the 20-day weighted moving average. Most importantly, the index has formed a descending channel pattern that is shown in green. It is now between this channel.
Therefore, I suspect that the index will remain within this range in the near term. An upward breakout will happen when the index moves above the resistance at £6,000. On the other hand, a downward breakout will happen when it moves below the resistance at £5,600.