- Summary:
- FTSE 100 should be down by near 5.5% from Friday’s close and trading around 5336 according to spread bet brokers offering weekend trading. What lies ahead?
At the time of writing, the FTSE 100 was be down by near 5.5% from Friday’s close and trading around 5350 according to spread bet brokers offering weekend trading.
If the index remains around 5350 as trading starts for the new week, then this means that the FTSE 100 will open near last week’s low of 5197.
Last week’s low in the FTSE 100 is interesting from a technical perspective as the index bounced from a similar level, the 5213 level, in May 2012.
If last week’s low holds as support, we could see the FTSE 100 reach Friday’s closing price of 5653.6, and possibly 6000 later in the week. However, if the index trades below last week’s low of 5197, we could see traders target the November 2011 low at 5072.8, followed by the June 2010 low at 4786.
Read our Best Trading Ideas for 2020.
Challenging the Coronavirus Spread
The FTSE 100 is lower as the number of coronavirus cases continues to rise, and Europe is shutting down.
Spain is following Italy, and from Monday at 8 am local time, Spanish residents are mainly being confined to their homes. The number of deaths doubled in Spain from Saturday to Sunday, while people infected with Covid 19 rose by 33% to 7753. The streets of Madrid are already deserted, and starting from tomorrow, people will only be allowed to leave their homes to buy food, medicine, work, and helping a vulnerable person.
France has also ordered the closing of restaurants, non-essential shops, and places of entertainment. Yet, they still went ahead with nationwide municipal elections despite the high risk of spreading the virus.
All of these steps will hurt the economy of Spain and France. However, that is why indices like the FTSE 100 are lower by about 31% from their 2020-highs. If we look at how the Chinese government stopped the spread of the coronavirus, then it is clear that more is needed in Europe. I, therefore, think more governments will take further actions, as not stopping the coronavirus, will not land well with the people. If European stock markets follow the path of the Chinese stock markets, then they could bottom out when growth in the virus slows down. Shutting down is painful for the stock markets and economy, but could be the start of the end of the latest coronavirus breakout.