FTSE index is down by more than 1% in the futures market, adding to the 0.70% loss made yesterday. The index is trading at £6,270, which is 1.80% below this week’s high of £6,400. With no major scheduled events today, the Footsie is likely dropping because of this week’s earnings and economic data from the UK.
This week several important FTSE 100 components released their quarterly earnings and interim reports. Yesterday, Burberry shares dropped after the company warned about the impact of the new wave of the pandemic. The firm’s revenue in the first half of the year to September dipped by 31% ro £878 million. Its profit before tax dropped by more than 62%.
National Grid was another FTSE index component to release disappointing earnings. The electricity supplier said that its operating profit declined by 12% to £1.1 billion. The firm also expects that the overall free cash flow will decline by £1 billion even as it increased its dividend by 16.57%. Other top movers yesterday were Weatherspoon, Legal & General, WH Smith, and GVC.
The FTSE 100 index is also falling because of the disappointing third-quarter GDP data from the UK and the dimming outlook at the new wave advances. The data showed that the UK economy expanded by more than 15% in the third quarter, missing estimates. In response, Rishi Sunak hinted that the government would provide more stimulus but analysts are torn about what more he can do.
FTSE index technical chart
In my FTSE 100 update yesterday, I used the daily chart and concluded that the index would continue rising, with the next target being at £6,400. I still believe that this reasoning is correct, especially when you look at the longer-term chart.
However, a look at the four-hour chart shows that the FTSE has started to decline and is about to move below the 15-day exponential moving average. With no major news today, I suspect that the downward trend will continue as bears target the 15-day EMA at £6,235. I don’t think moves below this level will happen today.
The £6,350 level will be the invalidation point for this trade. If it moves above this level, it will mean that there are still buyers who will push it higher.
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FTSE 100 technical chart
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