FTSE 100 is off to a bullish start to this week’s trading. The UK’s blue-chip stock index is currently trading at its four-month highs at 7,515.7, 141 points or 1.91% from where it opened today.
Gainers and Losers
Gains are currently led by British American Tobacco at 4.46%, followed by Bunzl at 4.27%. In third is Glencore at 3.92%. Nmc Healthcare LLC is in fourth at 3.69% while Barclays rounds up the top 5 with a 3.44% profit.
Brexit Plan to be Passed Soon?
Market investors seem to be currently fueled by risk appetite stemming from the results on the last UK general elections. Remember that Prime Minister Boris Johnson and the rest of the Conservatives Party have secured majority seats in Parliament. This means that a Brexit deal will likely be passed soon.
It could be that equity investors are celebrating the end of the uncertainties brought about by the UK from the European Union. Now we’ll just need to wait and see how Prime Ministers negotiates the country’s exit plan.
US-China Trade Deal
It also helped that the US announced a phase one deal with China. The plan to rollback existing tariffs and cancel additional ones which were due on December 15 also cleared uncertainties brought about by the ongoing trade war.
However, be warned that China has yet to confirm if it has indeed agreed to buy 200 billion USD-worth of US goods until 2021 in exchange for tariff reduction.
Worse-Than-Expected UK PMIs
In fact, risk appetite seems to be the dominant theme for today that not even disappointing UK data could stop the rally on FTSE 100. Data from Markit showed that the manufacturing and services sectors in the UK continued to contract in November. The manufacturing PMI printed lower at 47.4 versus the 49.1 forecast and October’s 48.9 reading. Meanwhile, the services PMI was at 49.0, down from its previous reading at 49.3. The forecast was also higher at 49.6.
Remember that readings below 50.0 indicate a contraction in the economic conditions of the industry.
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FTSE 100 Outlook
On the daily chart of FTSE 100 CFDs, we can see that the UK’s blue chip stock index is trying to push past resistance at 7,442.7. This level has limited an upward movement on the stock index since July 2019. If there are enough buyers in today’s trading and we get a strong bullish close above resistance, it could be an indication that the stock index is on its way to its yearly highs at 7,727.4.
On the other hand, if buyers are not able to sustain the rally in the FTSE 100 today, a bearish candlestick may indicate a drop. We can then look for support around 7,120.7 where the stock index has found support for the past five months.
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