- Summary:
- FTSE 100 is approaching an important breakout point. Watch out the energy and real estate sector, which are very vulnerable today.
The FTSE 100 index was little changed in the futures and CFD market. There are three main things at the back of investors’ minds.
First, there are thoughts about the disastrous jobless claims data from the United States that were released yesterday. The thinking is that the situation in the United Kingdom could be significantly worse than that of the US. Just yesterday, British Airways, the troubled flagship carrier said that it would suspend more than 30k employees. Its rival, Virgin Atlantic is seeking a government bailout.
Second, there is the issue of crude oil since many big oil companies are significant components in the index. Indeed, energy companies like BP and Royal Dutch Shell represent about 14% of the index. They are the third after financials and consumer staples. As I reported earlier on, the concern is whether Donald Trump was accurate about his prediction that Saudi and Russia were closer to a deal on oil.
Third, there are concerns about the real estate sector. Most deals in the industry have been suspended and many retailers have started saying that they won’t pay rent. Another problem not being talked about is the fate of WeWork, the troubled office sharing company that is the biggest tenant in London. The company has high chances to fail since Masayoshi Son appears to have given-up on it.
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FTSE 100 Technical Analysis
The FTSE 100 index was unchanged in the CFDs market. Looking at the one-hour chart, we see that the index has been consolidating, and therefore forming a triangle pattern. The tip of the triangle is nearing, which means that a potential breakout is inevitable. The question is the direction of the breakout. I expect the index to breakout lower although this could change because the situation in the energy market is still volatile.