FTSE 100 extend loses for second consecutive session after yesterday’s sharp loses. The index breached yesterday the 100-day moving average and the index today attempts to break below the 50-day moving average.
Investors dump risky assets yesterday and continue today as the number of new coronavirus cases rises in many states in U.S. Prime Minister Boris Johnson announced that the pubs and restaurants would reopen on July 4.
IMF warned for a contraction of 10 in the U.K. while it expects a partial recovery in 2021. The IMF’s new forecast shows once again the severe economic damage by the coronavirus crisis.
Meanwhile, trade tensions are also coming back to the headlines. U.S. discussing new tariffs on $3.1 billion of European products in an aggressive move that would broaden a transatlantic dispute over the aircraft subsidies. The target is products from France, Spain, Germany, and the U.K. The products are olives, beer, gin and trucks, and the tariff can be up to 100%. The Trump administration also wants to increase tariffs on imports such as aircraft, cheese and yoghurt from 15% to 25%.
Lloyds Banking Group (LLOY) is 2.78% lower at 30.72, Vodafone (VOD) is 0.72% lower at 124.11. Barclays (BARC) is 1.50% lower at 110.16, and RBS is 2.59% lower at 116.58.
FTSE 100 is 1.17% lower at 6,048 as the index testing the 50-day moving average. The move yesterday cancelled the bullish momentum after the FTSE 100 breached below the critical 100-day moving average. Now the bears are in control, while if today the index settles below the 50-day moving average we might see an acceleration of the selling pressure.
On the downside, initial support for the FTSE index will be met at 6,040 and 6,030 the daily low and the 50-day moving average. If the bears break that support, then the next target is at 5,946 the low from June 15.
On the contrary, the first resistance for the FTSE 100 is at 6,123 the daily top. The next hurdle stands at 6,190 the 100-day moving average. Next resistance to watch is at 6,321 the high from June 24.