The FTSE 100 index is up by 0.85% in the futures market as traders focus on the US election and the ongoing earning season. They are also assessing the impact of the new lockdown in England. The index is trading at £5,680, which is substantially higher than yesterday’s low of £5,487.
Other indices have also risen in the futures market. In the United States, Dow Jones, S&P 500, and Nasdaq 100 have added 0.70%, 0.50%, and 0.20%. Similarly, in Europe, the DAX index and Stoxx 50 are also in the green.
The FTSE 100 is gaining because investors are waiting for clarity after the US election. If Donald Trump wins the re-election, investors believe that he will continue with his policies, that include tariffs, deregulation, and low interest rates. Because of his friendship with Boris Johnson, they also expect a trade deal between the UK and the US. Such a deal will benefit most FTSE constituents.
On the other hand, if Biden wins, they are expect more regulations, higher taxes, and improved relationships between the US and its allies.
Still, regardless of who wins, investors hope that election-related risks will end and that the US will pass a new stimulus deal. Such a deal will be positive for companies in the United States and the UK as well. That is because many UK firms like Rolls-Royce, Meggitt, and Ocado have large businesses in the country.
Meanwhile, the market is also focusing on corporate earnings. Associated British (AB) Foods will be the company to watch today as the company releases its first-half results. Also, investors will watch out for Ocado as the company enters the non-food retail and logistics business.
FTSE 100 technical outlook
On the daily chart, we see that the FTSE 100 has been in the green in the past four consecutive days. It is now more than 4% higher than its Friday’s low of £5,485. Also, it has moved inside the descending channel that is shown in green. The index is also slightly below the 38.2% Fibonacci retracement level. (This retracement connects the highest and lowest points this year).
Therefore, by re-entering the descending channel, I expect that the index will now attempt to retest the upper side, which is at £6,000. On the flip side, a move below last week’s low of £5,500 will invalidate this thesis because it will send a signal that there are still sellers in the market.
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FTSE technical chart
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