The FTSE 100 index is down by 0.80% today as investors continue to worrying about the ballooning UK public debt. The index is trading at £5,845, which is slightly below the intraday high of £5,920.
Earlier today, the Office of National Statistics (ONS) released the UK inflation and public spending data. While inflation creeped-up because of the ending of the Eat Out to Help Out program, public spending continued to increase in September.
The public debt increased to more than £35.37 billion from the previous £29.3 billion. That increase was higher than the £32.40 billion that analysts polled by Reuters were expecting. This brings the total debt to more than £2 trillion, making the UK one of the most indebted developed countries.
Ironically, the public wage data came a few days after the UK received its latest debt downgrade by Moody’s. The agency lowered the rating to stable from negative, which is in a similar level with Fitch.
Also, the rising debt comes at a time when the UK is handling its second wave of infection. The new infections has led the UK government to announce some restrictions to movement. The most severe of these restrictions are in London, the country’s capital city.
The FTSE 100 is also falling as investors remain fearful about the slow pace of Brexit negotiations. With less than three months to go, one would expect that the two sides would be making final touches of a deal. However, as shown by the tweet by the senior UK negotiator, the two sides have a long way to go.
The FTSE 100 index has also turned around because of the rising value of the British pound. Today, the GBPUSD price is up by more than 0.85% and is trading at the highest level since October 13. A stronger pound is a bad thing for the FTSE 100 constituents because most of these firms do a lot of business outside the UK.
Fresnillo, the giant silver miner, is the biggest laggard in the FTSE today. The shares are down by more than 4.50%. Other top laggards are Coca-Cola, St James Place, Smith’s Group, and Barratt Developments. On the other hand, the top gainers are Evraz, Standard Chartered, Rolls Royce, and BT Group, among others.
FTSE 100 technical outlook
The four-hour chart shows that the FTSE 100 is having its worst day since October 15. It is trading at £5,825, which is below the descending trendline that is shown in red. The index has moved below the 15-day and 25-day exponential moving averages and is slightly above the previous triple bottom level of £5,800.
Therefore, it seems like the index will continue falling as bears aim for the £5,800 level. If this happens, it will open the possibility that the price will fall to the next support at £5,780. On the flip side, a move above the two moving average levels will invalidate this trend.
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FTSE technical chart
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