- Summary:
- FTSE 100 index has dropped to its YTD lows.
- INDEXFTSE: UKX is trading below 7500 points after breaking the 8000 points barrier just a few weeks ago.
- The index will remain volatile today due to the announcement of the UK spring budget.
FTSE 100 index (INDEXFTSE: UKX) is falling once again after a bounce in its last trading session. On Wednesday, the benchmark UK index dropped by 150 points. This also marked the new YTD lows for one of the most critical gauges of the UK economy.
The fresh yearly lows in FTSE 100 come on a day when the government is preparing to announce its UK spring budget for 2023. The budget will be presented by Chancellor Jeremy Hunt in the House of Commons at half an hour past noon. The budget will include several tax changes that can impact the FTSE 100 companies and the country’s economy.
INDEXFTSE: UKX Is 7% Down From Year Highs
Just a few weeks ago, FTSE 100 index soared above 8000 points for the first time in its history, making a new all-time high. Nonetheless, INDEXFTSE: UKX failed to gain any strength above the key psychological barrier and kept trading within the 7850-7950 range. As the banking concerns grew after the collapse of Silicon Valley Bank (SVB), the index started to correct.
The index opened at 7618 today but started to decline very sharply. Till press time, it has already fallen by 1.86%, a few points below the 7500 level. There can be more volatility in the UK shares once the spring budget is delivered. The negative price action in FTSE 100 can also be attributed to another losing day for most bank shares.
FTSE 100 Index Chart – 1D
INDEXFTSE: UKX chart depicts that the bears are clawing back in after a record rally in the first 2 months of 2023. The chart shows a breakdown from the head shoulders pattern, which is very bearish. FTSE 100 already appears to have met the target of this breakdown, but there is still no sign of a bounce.
If the index doesn’t bounce from its 200-day moving average, then the price may fall to 7308 points very soon. The 200 MA on the daily chart currently lies at the 7428 level. The 7308 will be the line in the sand for many investors as a weekly closure below this level can send FTSE 100 to its October 2022 lows of 6700 points.
