The FTSE 100 index is set to join the global rally in stocks as the country awakens to a countrywide shutdown.
In a statement yesterday, Boris Johnson said that movement will be restricted as the country battles an increasing number of Coronavirus cases. The number of infections has increased to more than 6,000 while the number of the dead has reached more than 300 people.
The statement came after the Prime Minister was accused of doing little to curb the spread of the disease.
At the same time, business activity in the UK has been heavily subdued. Food chains like Starbucks and McDonalds have shut down their stores while big manufacturers like Honda and Toyota have halted production.
Meanwhile, the government is readying a stimulus package that will see it give companies more than £350 million in aid. The government is also set to pay salaries to 80% of its workers in an unprecedented move.
The FTSE is not the only index that is set to soar. The DAX index is set to rise by more than 2% while the main US indices are up by more than 4%.
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FTSE 100 Technical Analysis
FTSE index futures are up by 4.78% at 0715 GMT. This implies that the index could open at about £5,400. This level is in par with the Friday’s high and the 78.6% Fibonacci Retracement level.
As shown on the three-hour chart, the index has been moving in a channel since March 16. This channel will continue if the index opens at the projected level. I expect it to find some resistance at this level and probably move lower. If this happens, I expect the index to attempt to retest the previous support at about £4,827. On the other hand, a bullish trend will continue if the index moves past the resistance of £5,400.