FTSE 100 jumped on the opening after the worst one-day sell-off since 1987 as the coronavirus outbreak has shut down the global economy. Central banks and governments are taking measure to combat the pandemic but without success. Federal Reserve yesterday announced a 3-day $1.5 trillion injection of liquidity to the markets via the repo market. ECB kept the interest rates unchanged while decided to expand its bond-buying program and introduced a new lending scheme, making unlimited liquidity available to local banks.
Bank of England cut rates by 50 basis points to 0.25% and announced extra measures to combat the coronavirus outbreak impact in the economy. The London Stock Exchange has introduced a temporary ban on short-selling of some Spanish and Italian shares in an attempt to prevent panic selling.
FTSE 100 has lost over 30% since the 2020 highs in January, while is 28% lower since the beginning of 2020.
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FTSE 100 Technical Outlook
FTSE 100 is 2.05% higher at 5345 attempting to recover some of yesterday’s sharp losses. The technical outlook is bearish as the index makes consecutive lower lows and lower highs. A warning signal for sellers is that the index is in deeply oversold level and a sharp rebound can’t be ruled out.
On the upside, first resistance for the FTSE stands at 5,588 the daily top. The next hurdle for the index is at 5,882, the high from yesterday’s trading session. A convincing break above might test the next supply zone at 6083 the high from March 11th.
On the flip side, investors focus has shifted to lower levels; the first support for the FTSE stands at 5,237 the daily low. If the FTSE index breaks below, the next support area is at 5,074 the low from November 24, 2011.
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