FTSE 100: UK stocks begrudgingly rise on concerns of a second wave of infections
The FTSE 100 rose by 60 basis points as investors reacted to the new reopening plans announced by Boris Johnson.
UK stocks rise on reopening plans
The UK has been one of the worst-affected countries in the world. Recent data shows that the country has the third most active cases in the world after the US and Spain. It also has the second most deaths after the United States. Worse, the data shows that the number of cases have been on an upward trend.
Therefore, the FTSE 100 rose cautiously because market participants are still worried about a second wave of the disease. In his statement, Johnson asked people who cannot work from home to go back to work. This includes people in construction and other physically demanding tasks. However, unions have criticized these guidelines, saying that they lacked teeth.
His guidelines also asked people to avoid public transport while schools in England will start reopening as early as on 1st June. Other guidelines say that hotels and restaurants will remain closed until July while all arrivals will be put to a 14-day quarantine. Most importantly, there will be bigger fines for those ignoring the rules.
Investors are cautious that these rules don’t go far enough and that they expose the UK to second attacks as has happened in other countries like Spain and China.
FTSE best and worst performers
Most stocks in the FTSE 100 were in the green, albeit marginally. The biggest gainer was John Matthey, the global chemicals company, whose stock rose by more than 4.65%. It was followed by Glencore, Mondi, and Pearson, all which rose by more than 1%. On the other hand, the worst performers were easyJet, Meggitt, Centrica, and Intermediate Capital, which dropped by more than 3.5%. Other notable laggards in the FTSE 100 were BAE Systems and WPP.
The FTSE 100 index found some resistance at £5,973, which is slightly above the 38.2% Fibonacci retracement level and along the 50-day EMA on the daily chart. The price also remains above the ascending pink trendline. Therefore, the potential scenario is where the bulls attempt to push the index higher as they attempt to test the intersection of the 50% retracement and the upper channel at £6,240.
On the other hand, a move below £5,634 will invalidate this bullish trend. This price is at the middle of the 38.2% and 23.6% retracement levels. It is also along the swing low established on May 4.