FTSE 100 Index (INDEXFTSE: UKX) has failed to break above 7,500 points once again. After a strong start to the week, the benchmark index of UK equities appears to be losing momentum. The index is still 3.57% up from its monthly lows.
On Tuesday, the index tracking FTSE 100 companies dropped by 25 points. At press time, the index stood at 7,460 points after losing 0.35% during today’s trading session. After a brief recovery, bank shares remained sideways today.
BOE Governor Says UK Banks Remain Resilient
Major UK equities started the day with a positive price action after the comments from the Bank of England Governor Andrew Bailey. According to the chief of the central bank, UK banks remain resilient amid global banking system concerns. He also said that the ongoing banking crisis in the world was not a cause of stress in the UK.
Banks were the hardest-hit sector this month due to multiple bank failures in the US and the concerns about the financial health of swiss lender Credit Suisse. This led to a major drop in the FTSE 100 index, which fell from 7,900 to 7,200 points within a couple of days. Although the takeover of Credit Suisse by UBS Group resulted in a bounce in Bank shares, most are still trading below their yearly openings.
FTSE 100 Index Must Hold 200 MA
As mentioned in our last analysis, INDEXFTSE: UKX needs to bounce from the 200-moving average, flipping it into support. An acceptance below 7,428 points will make FTSE 100 index forecast extremely bearish for at least the midterm.
A major thing of concern for UK investors is the recent increase in MoM inflation. This is pointing towards more rate hikes by BOE that will keep the share prices in check in the coming months. However, a sudden pivot from US Federal Reserve may cause its UK counterpart to do the same.