FTSE 100 slide in early trading amid rising concerns of a second wave of COVID-19 infections. The increase in new confirmed coronavirus cases in countries such as Germany, South Korea and China that have eased the lockdown increase investor’s worries, that the lockdown might be extended. Fed chairman warned of slow recovery and long term damage to the U.S. economy. He also rejected the case for negative interest rates but added that the risks are to the downside.
The Bank of England (BOE) Governor Andrew Bailey said that central bank could help Britain handle the extra debt incurred from COVID-19, suggesting central banks policies could avoid the need for austerity.
Lloyd’s of London expects the global insurance industry to suffer $203 billion worth of losses from the coronavirus economic impact.
FTSE 100 dragged by easyJet (EZJ) -3.5% at 474.60, InterContinental Hotels Group plc (IHG) -3.05% AT 3,054, Anglo American (AAL) -2.86% at 1,338, Barclays plc (BARC) -2.79% at 95.38 and Royal Bank of Scotland Group (RBS) -2.78% at 103.20.
The previous week the Bank of England in its policy meeting kept the interest rates unchanged at 0.10% but surprised markets keeping also the QE unchanged.
FTSE 100 is 1.93% lower at 5,785 at weekly lows as the index correction from monthly highs continues targeting the support at the 50-day moving average. The short term technical outlook remains bullish above the 50-day moving average at 5,740. The longer-term technical outlook remains bearish as the FTSE 100 continues to trade below the 100 and 200-day moving averages.
On the downside, initial support for the FTSE 100 stands at 5,777 the daily low. If the index breaks lower, the next support area is at 5,740 the 50-day moving average which if breached more sellers night enter the action. More support for the FTSE index would be met at 5,634 the low from April 22.
On the other hand, the first resistance for FTSE index stands at 5,904 the daily highs. The next resistance for the FTSE 100 index is at 6,000 the high from yesterday. If the index breaks above 6,000 the next resistance will be met at 6,148 the high from April 30.