The FTSE 100 index is set to buck the trend we saw in the US and Asian markets. Futures tied to the index have declined by more than 2%.
The decline comes at a time when banks are concerned about the UK housing market. Some of the biggest banks in the country have asked the government to suspend the housing market. This is because of how difficult it is to value houses during this period of crisis. At the same time, according to Reuters, the government has asked homebuyers to avoid moving houses during the period. Meanwhile, Lloyds and Barclays banks have suspended their mortgage businesses.
Another big news is that investors are concerned that the ongoing lockdown could last for a longer period than expected. This is after the number of Coronavirus cases in the UK spiked to more than 11,658. This was a 2,129 jump from the previous day.
UK Coronavirus CasesOn a positive side, the government is readying a large stimulus package that is set to provide support to the economy. According to the Guardian, the government is preparing to pay self-employed citizens 80% of their monthly pay. The plan will offer payments, starting from June, to people who earn less than £50,000 every year. This news came after the government pledged to pay wages to people who have been unable to work during the crisis.
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FTSE 100 Index Technical Analysis
The FTSE 100 index is set to open at around £5,671, which is 100 points below its yesterday’s close. On the four-hour chart, we see that the index formed a double bottom pattern on 16th and 23rd March. It has been attempting to rebound since then. Yesterday, the index was a few points below our target price of £5,850. Still, the momentum and the RSI indicators show that the upward trend could continue. As such, I expect the decline to be short-lived and the index to test the 50% Fibonacci Retracement level of £6,200 if it moves above our yesterday’s target.