FTSE 100 futures are up by more than 0.40% as traders continue watching the US election and the Bank of England (BOE) interest rate decision. The index is trading at £5,885, which is the highest it has been since October 23.
The FTSE is not the only index rallying. In Germany, the DAX index futures are up by more than 0.95%. In the United States, Dow Jones and S&P 500 futures are also up by 0.90% and 1.05%, respectively. The same story is happening in Asia, where the Nikkei and Hang Seng are also rallying.
The biggest driver for the FTSE 100 is the US election, where Joe Biden is set to become the next president. As a result, investors are relatively optimistic that the Biden era will have limited tensions, especially among friendly countries like the UK.
Most importantly, investors hope that the deadlock in Washington will lead to status quo in terms of taxes. Since most companies in the FTSE also have a lot of business in the US, investors believe that the low tax regime will continue. That will benefit companies like Meggitt and Intercontinental that will see low taxes.
The index is also waiting for the BOE interest rate decision that will happen in the next hour. Analysts polled by Reuters expect that the bank will leave interest rate unchanged and possibly add more money to its quantitative easing program.
Meanwhile, investors are also waiting for an update about AstraZeneca’s vaccine. The company will likely comment about the progress when it releases its third-quarter results later today. Other companies that will release their earnings are J Sainsbury, Auto Trader, Inchcape, Aveva, and Wizz Air.
FTSE 100 technical outlook
On the daily chart below, we see that the FTSE 100 is in its second consecutive day of gains. It is trading at £5,885, which is significantly above this weeks low of £5521. It has also returned to the descending channel that is shown in green. It has also moved above the 38.2% Fibonacci retracement level. But, it is also below the 100-day and 50-day exponential moving averages.
Therefore, I suspect that the index will continue rising as bulls attempt to move to the upper side of the descending channel at £5,800. For this trade, the support will be at £5,600, which is the lower side of the channel.
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FTSE technical chart
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