The FTSE 100 index has made a steady recovery in the past few days after slumping to the lowest level since March this year. The blue-chip index was trading at £6,935 on Tuesday morning, which was higher than last week’s low of £6,785. It has crashed by almost 10% from its highest level in 2022, meaning it has outperformed its global peers like the DAX Index, FTSE MIB, and CAC 40.
Is the Footsie recovery sustainable?
The FTSE 100 has risen in the past two straight days as investors buy the dip. The new wave of buying happened after Kwasi Kwarteng decided to change some parts of the mini-budget. In the new proposal, they decided to get rid of tax cuts to wealthy Britons. In total, that proposal would have cost the taxpayer more than 2 billion pounds, which is a tiny part of the 45 billion tax cut.
The next key catalyst for the FTSE index will be the upcoming Tesco earnings that are scheduled for Wednesday. These results are important since Tesco is the biggest retailer in the UK with hundreds of stores. It also has a substantial market share in the country, making it a barometer for the UK economy. Analysts expect that its results will disappoint.
The FTSE 100 will also react to the upcoming OPEC+ meeting. The cartel is expected to lower production by about 1 million barrels in a bid to lift oil prices. Higher prices will benefit several FTSE 100 shares like BP and Shell but hurt most of them.
Other key FTSE 100 stocks to watch will be Greggs and RS, which are scheduled to publish their earnings, These results will provide more data about the performance of the UK economy. RS Grop owns eight leading brands in the industrial sector like RS, Allied Electronics, OKdo, and DesignSpark among others.
FTSE 100 forecast
The daily chart shows that the FTSE 100 index has been in a strong bearish trend in the past few days. Last week, it managed to crash below the important support level at £6,967, which was the lowest level on June 7. The index has also dropped below the important 25-day and 50-day moving averages.
Therefore, the index seems to be forming a break and retest pattern, which is usually a bearish sign. If this happens, we can’t rule out a situation where it retests the support at £6,800. A move above the resistance at £7,100 will invalidate the bearish view.
