The FTSE 100 is set to decline by more than 1% as concerns about Brexit remain. The index is also reacting to the relatively weaker UK retail sales numbers. Footsie futures are trading at £6,488, which is lower than this week’s high of £6,640.
What happened: The biggest concern today is about Brexit. In a note yesterday, Downing Street asked the European Union to change its mind about fisheries, which has become a major issue. The note sounded as if the two sides have made progress on other issues.
Another mover on the FTSE 100 is the UK retail sales numbers. According to the ONS, the overall retail sales declined by 3.8% in November after rising by 1.3% in the previous month. That decline caused the annual increase to fall from 5.8% to 2.8%. Similarly, the core retail sales dropped by 2.6% in November.
Why these matters: First, Brexit is important for the FTSE 100 because its constituent companies do a lot of business in Europe. Therefore, if there’s no deal, it means that these firms will see higher costs and even see barriers to European entry.
Second, retail sales are important since they are good measures of the strength of the economy. Also, retailers like Tesco, Ocado, Morrisons, and Sainsbury are key components of the index. Therefore, these retailers will be in focus because of their exposure to Brexit issues.
What next for FTSE 100?
On the daily chart, we see that the Footsie has been under intense pressure this week. It has even failed to move above £6,640, which is its highest level since March this year. The price is also along the 61.8% Fibonacci retracement level.
Therefore, for today, the index will remain at the current range. In the long-term, however, it will also possibly experience a bullish break-out.
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Footsie technical chart
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