As risk aversion slowly eases in today’s European session, the FTSE 100 is recouping some of its losses from yesterday. The UK’s stock index is up by 1.80% at 108.0 points at 6,074.0. Meanwhile, FTSE 100 CFDs is up by 4.36% or over 250 points at 6,070.0. If the performance of today’s Asian stocks is any indication, FTSE 100 would finish today’s trading in the green.
Leading today’s gains is metals and mining company, Rio Tinto, with a 4.76% profit. Meanwhile, gas company Royal Dutch Shell is in second place with a 4.58% uptick. In third place is BP, which is also an oil company, with a floating profit of 2.68%.
FTSE 100 is benefitting from the market’s improved sentiment. Reports that the US may soon implement tax cuts to help support the US economy is helping push stock prices higher. However, it could easily fizzle if the US Congress rejects US President Trump’s request for it. With that said, it should not come as a surprise if the FTSE 100 resumes its downtrend soon.
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FTSE 100 Outlook
On the hourly time frame, it can be seen that FTSE 100 CFDs has significant room to trade higher. If buyers can sustain their momentum, the stock index could rally to near-term resistance at 6,440.0. At this price, FTSE 100 could test the 61.8% Fib level (when you draw the Fibonacci retracement tool from the high of March 4 to today’s low) and the 100 SMA. If resistance does not hold there, it may even go up to the 6,600.0 handle where the 200 SMA and falling trend line are (from connecting the highs of February 20, February 21, March 4, and March 5).
Conversely, if risk aversion once again envelopes market sentiment, we may not see the FTSE 100 pullback higher. Instead, it could retest today’s lows at 5,702.8 for support.