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FTSE 100: Why is troubled Carnival share price up 16% in the past month?

FTSE 100
FTSE 100

The FTSE 100 index is falling today after having three consecutive days of minor gains. The index is trading at £6,300, which is higher than this month’s low of £5,900. What’s interesting in the FTSE is that more investors are buying Carnival shares, even as the number of coronavirus cases jump around the world. Carnival share price is at 1,140p and is up by 16% in the past 30 days. Still, it is among the worst-performing stocks in the FTSE this year having lost more than 70% of its value.

Carnival share price rises

Carnival is one of the most vulnerable companies in the FTSE 100. The company operates in an industry that has been most hurt during the coronavirus pandemic. In fact, the company is not doing any business today because most countries have stopped accepting cruise liners.

At the same time, the company is losing millions of dollars every day and unlike airlines, the firm received no rescue package from the government. The reason for this is clear. Unlike airlines that are registered and pay taxes in the United States, cruise lines are registered in small island nations where they pay little to no taxes. Also, the industry employs only a small amount of people in the US.

As the number of coronavirus cases have jumped, the company has extended its duration for reopening to September. And there is higher chances that the firm will not reopen because the number of cases is rising.

Carnival share price fell partly in the past few days after its credit rating was cut by S&P. This will make it difficult for the FTSE 100 firm to raise money.

However, a look at key data suggest that more investors are buying Carnival share price. For example, according to Hargreaves Lansdown, Carnival stock is among the most traded in the FTSE 100. Also, most investors are actually buying the shares. 32% of investors are selling their Carnival shares while 68% of them are buying. This is also evident in the United States, where Carnival share price jumped by 4% yesterday while the short interest has fallen.

FTSE 100 to fall because of virus jitters

The FTSE 100 is falling because of jitters associated with the coronavirus pandemic. With numbers in the United Kingdom and the US rising, analysts are now pricing-in a situation where more lockdowns are put in place in the UK. This is a day after Boris Johnson announced more measures to ease the lockdowns. Among the FTSE 100 companies to watch today are Carnival, Alpha Financial Markets, Savanna Energy, and ULS Technology among others.

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FTSE 100 technical analysis

The daily chart shows that the FTSE 100 is trading slightly above the 50% Fibonacci retracement level. The price has also just moved above the 100-day exponential moving average. Also, the FTSE is in an overall bullish trend, as evidenced by the ascending trend line. As such, the trend will likely continue as bulls attempt to test the important resistance at £6,400.

On the flip side, a move below £6,000 will invalidate the upward trend. This is an important psychological level which is at the intersection of the ascending trendline and the 38.2% retracement level.

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