FTSE 100 Rises as Focus Remains on Brexit and Royal Dutch Shell
The FTSE 100 index is set to add 25 points ahead of the crucial talks between Boris Johnson and European Union leaders that will happen in Brussels. Other European indices like the DAX index, CAC 40, and Stoxx 40 are also in the green today.
The biggest mover for the FTSE index will be the outcome of Brexit talks between Johnson and Ursula von der Leyen. They will attempt to remove the current gridlock on the future relationship between the UK and EU.
Still, there are significant differences between the two sides. For example, on fisheries, there is a concern about the size of compromise that the UK and France will be ready to take. The same is true about fair playing field rules.
A deal will be a good thing for the FTSE 100 and its constituent companies like Imperial Brands, Rolls Royce, and Meggitt that do a lot of business in Europe.
The FTSE index is also rising as the rollout of a Covid vaccine started. Yesterday, the UK became the first western country to start vaccinations using the product made by Pfizer and BioNTech. This rollout received a boost after US regulators talked positively about the vaccine.
With no major economic data from the UK and corporate earnings, focus will be on Royal Dutch Shell. The company suffered significant executive exit ahead of the launch of its clean energy business.
FTSE 100 technical outlook
The FTSE 100 has been on a strong rally in the past few weeks. From October 30th, the index has jumped by more than 20%, which is in part because of the optimism of a Brexit deal.
On the daily chart, the index managed to move above the important resistance at £6,506, which was the highest level in June. It has also managed to move above the 61.8% Fibonacci retracement level and the short and longer-term moving averages.
Therefore, unless Brexit talks collapse, the path of least resistance will be higher. However, if there no deal is reached, the index will possibly resume the downward trend.