Premarket: FTSE 100 Steadies After Washington Inks Stimulus Deal

ftse 100
ftse 100

FTSE 100 futures rose by 1% a day after the index had its biggest single-day rally since 2008. The rally yesterday came on the same day as the country started a complete Coronavirus lockdown.

Today’s rally is generally in line with the optimism in the market after Democrats and Republicans made a $2 trillion deal to support the economy. In a statement, Mitch McConnel said that the two sides had agreed on bipartisan legislation after intense negotiations.

The deal will set up a fund to rescue many companies, which have been decimated by the disease. Some of the most affected companies are in the airline and hospitality industries. Additionally, American adults earning below $75,000 per year will receive checks of up to $1,200 while children will get $500.

The UK government is considering its rescue package also. Boris Johnson has allocated more than $66 billion in direct support to businesses and individuals. The government will use part of these funds to pay most employees at risk of losing their jobs. Companies will also receive funds in the form of grants and loans to help them navigate the crisis. Airlines like British Airways and hospitality chains like McDonald’s and Starbucks have been the most affected.

Read our Best Trading Ideas for 2020.

FTSE 100 Technical Analysis

As we can see, the FTSE 100 index made a double bottom on March 16 and March 20. If the data in the futures market holds, the index will open at about £5580, which is 16 points below the previous double tops. I expect the index to retest the resistance level of £5596, and then pare back those gains.

On the flipside, the index may remain being bullish if it breaks above this resistance. If it does this, the next key level to watch will be the psychologically-important resistance level of £5,600.

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