FTSE 100 index (INDEXFTSE: UKX) has bounced back after dropping to its lowest level in the last four months. The index is 4.8% up from its Monday lows which translates into an increase of 349 points within the last three trading sessions. Shares of most of the FTSE 100 companies have shown some recovery from their last week’s lows, which has led to this bounce in the benchmark index.
Banks were the hardest hit sector in last week’s slumps as the investor faith in the global banking system got tested. Consequently, UK banks, including HSBC, Barclays, and Natwest, made their fresh yearly lows.
The February 2023 CPI report in the UK was released today. Quite unexpectedly, the report showed an increase in inflation during the second month of the year. As per the data from the Office for National Statistics, the February inflation was recorded at 10.4% as compared to the market expectations of 9.9%.
This was an increase of 0.4 on a MoM basis. Food and clothing were the sectors that contributed the most to this increase. Despite the increase in inflation, FTSE 100 index showed strength and was trading sideways till press time. The index opened lower today but gained a few points as the day progressed.
The index tracking the top 100 UK companies dipped below the 200 moving average on the daily chart. This led to a further drop below the December 2022 lows. However, the recent bounce has once again propelled the index above 200-day MA. This can be taken as a sign of strength as the bulls are back in business.
The next key level to watch is the December high of 7617 points. I expect a pullback from this level. A reclaim of this level would be very bullish for the FTSE 100 index forecast, as this could mean another push to the 7800-8000 level. Today’s rate hike decision will keep the price action volatile for the rest of the day.
This post was last modified on %s = human-readable time difference 14:31