The FTSE 100 index retreated in early trading as the market reflected on the strong inflation data from the United Kingdom. The index also fell as commodity prices retreated. Other global indices like the Nasdaq 100, DAX, and CAC 40 index also declined sharply.
FTSE 100 news: The FTSE index declined today after the strong UK inflation data. The numbers showed that the headline consumer index doubled in April this year. In theory, rising inflation tends to be a bearish sign for indices because of higher interest rate concerns.
The sell-off on the FTSE 100 is so severe that only four companies in the index are in the green today. Also, bank shares that tend to do well in a high-interest rate environment have struggled today.
The index has also declined because of the falling commodity prices. Most commodities like copper and iron ore have recently retreated in the past few days. This is after China warned speculators about price manipulation. Indeed, mining companies are the worst performers in the FTSE index today. Among them are Antofagasta, BHP Group, Anglo American, Rio Tinto and Glencore.
FTSE 100 forecast
The daily chart shows that the FTSE 100 index has formed an ascending channel in the past few weeks. This channel is shown in black. Also, the index is still being supported by the 50-day and 25-day exponential moving averages (EMA). It also seems to be forming a small head and shoulders pattern, which is usually a bearish sign.
Therefore, in my view, there is a possibility that the index will keep falling as bears target the lower side of the channel at 6,900. On the flip side, a move above the resistance at 7,110 will invalidate this trend.