- Summary:
- FTSE 100 drifted sideways as hopes of a coronavirus cure disappeared and as the UK retail sales data dropped to all time low in March this year
The FTSE 100 index is down by more than 1% as investors’ hope on a coronavirus cure disappear. The market also reacted to weak March retail sales from the UK.
FTSE 100 best and worst-performing stocks today
Most stocks in the FTSE 100 declined today as investors reacted to the weak retail sales numbers. Only six companies in the index rose. The biggest winners were retailers like J Sainsbury, Tesco, and Ocado, which benefited from increased supermarket sales. Reckitt Benckiser also rose by almost 1% as sales of personal care items jumped in the month.
The worst-performing stock in the index is Melrose industries, a company that buys and improves companies. The stock declined by more than 5% as most companies in its portfolio are expected to continue struggling. Other weak performers are Meggitt, Intertek, and IAG.
Retail sales slump
The FTSE 100 index declined mostly because of the recent weak data from the UK. Just yesterday, we received the worst manufacturing and services data in history. And today, the ONS released the worst retail sales data in history.
These numbers show that the UK is going through the worst recession in modern times. An analysis by Bloomberg Intelligence showed that the economy would slump by more than 20% this quarter. Another one by OBR showed that the economy would slump by more than 30%.
The question is whether it is possible for the FTSE 100 to thrive in a period when a country is in depression. I think this is possible in the near term, only if the banking sector remains stable and if the government and central bank provide enough capital.
Quick coronavirus cure gone
The FTSE 100 index also dropped because hopes of a quick coronavirus cure faded last night. This was after a Chinese test said that remdesivir had failed in standardised tests. The drug, which was used to treat Ebola, was thought to be the magic drug that could ease the current pandemic. Therefore, experts say that it will take months for scientists to come up with a drug.
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UK100 technical outlook
Looking at the four-hour chart, we see that the UK100 index has been drifting sideways since March 25. Any upward pressure during this time found resistance near the 38.2% Fibonacci retracement level at around £5,800 level. Similarly, any downward pressure found support near the 23.6% retracement level at around £5,400. Also, the price has remained slightly above the 100-day moving average.
In the near term, I expect the index to continue moving in the sideways direction. Any strong bullish trend will happen if it manages to move above the upper resistance level of £5,940. Similarly, a strong downward push will happen if the index manages to move below the lower support at £5,340.