The FTSE 100 index is rising today as traders assess the ongoing mergers and acquisition (M&A) trends in the United States. The index is reacting to news of improving Donald Trump’s health and the likelihood of a stimulus deal. Rolls Royce share price is leading the blue-chip index as investors pile into the stock, which is up by more than 100% in the past one week.
Rolls Royce share price boosts FTSE 100
The FTSE 100 index is being led by Rolls Royce, the embattled engine-maker. The company’s shares are up by more than 12% and are trading at 219p. That is substantially higher than last week’s lowest level of 102p. Indeed, the stock has been in the green in the past six consecutive days.
There are two main reasons why Rolls Royce share price has been in an unstoppable bull run. First, the company is in the process of raising more than £5 billion in a bid to shore its capital. The new fundraising will mean that the embattled company will have enough resources to survive the current pandemic. The funds will be through a 10 for three rights issue that will come in at a 41% discount. It has also planned a £1 billion bond offering. Second, the company’s stock has jumped because of the perception that it was too cheap to ignore.
Still, Rolls Royce is still an embattled company that will see several years to recover. Just this week, the CEO of Boeing, its close rival said that it will take many years for the airline industry to recover. Even after it recovers, the company will be at a disadvantage because long-haul planes will be the last to come online.
Rolls Royce shares have been on a strong upward trend
Top movers in the FTSE 100 index
Other top gainers in the FTSE 100 index are property companies like British Land, Land Securities, and Compass Group that are all up by more than 3%. GVC Holdings, the owner of Bwin, is another top gainer with its stock rising by 1.95%. On the other hand, the worst-performing companies in the FTSE are Ocado, Persimmon, Pennon, and Ashtead Group.
FTSE 100 technical outlook
The daily chart shows that the FTSE 100 index has been in the green in the past three consecutive days. It is now trading at £6,011, which is the highest it has been since September 18. It has also moved slightly higher than the 25-day exponential moving averages.
Also, the price is slightly below the descending trendline that is shown in blue. This trendline joins the highest levels in June, July, August, and September. It also forms the upper side of the descending channel. Therefore, in the immediate near term, I suspect that the index will continue rising as bulls aim for this resistance.
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FTSE 100 index technical chart
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