FTSE 100
The FTSE 100 index is down more than 0.40% as traders react to the rising tensions between China and the US. The index is trading at £6,111 and is in its sixth straight day of decline and is in the lowest level since July 14. Other indices in Europe are also in the red with the exception of the DAX index that is up by 0.40%. In France, the CAC 40 has dropped by 0.10% while in Belgium, the BEL 20 is down by 0.53%.
The biggest reason why the FTSE 100 index has dropped today is the rising tensions between the United States and China. According to media sources, US diplomats in Chengdu have already left their offices and are heading back home. The same is true with Chinese diplomats in Houston.
Over the weekend, tensions escalated as China moved its troops to the South China Sea, a highly-controversial area. The troops will hold its exercises until Sunday, in a move that has been condemned by the United States.
Recently, the US has imposed new sanctions on Chinese officials and is actively seeking to undermine the second most-powerful economy in the world. All this is disadvantageous for the UK and firms in the FTSE 100.
While the FTSE 100 index is in the red today, a special group of companies are deeply in the green. The best-performing shares in the FTSE 100 is Polymetal, one of the biggest mining companies in the index. Its share price is up by 5.70%. It is followed by Fresnillo, the giant Mexican silver mining company whose share price is up by 3%. Antofagasta, Glencore, BHP, and Anglo-American share prices have jumped by more than 1%.
The reason for this is that metals are having their best days on record. Gold price has jumped to its all-time high while silver and copper prices are at multi-high levels.
On the other hand, the worst performers in the FTSE 100 index are IAG, Melrose Industries, Rolls Royce, Burberry, and HSBC. These shares have dropped by more than 2%.
The daily chart below shows that FTSE 100 has been in a downward trend in the past few days. The price is below the 50-day and 100-day exponential moving averages and slightly below the 50% Fibonacci retracement level. Also, the price is below the green ascending trend line. Therefore, it seems like bears have taken over, meaning that the price is likely to continue falling. If it does, bears are likely to attempt to test the next support at £6,000.
On the flip side, a move above £6240 will invalidate this trend. This price is along the 50% Fibonacci retracement level as well as the 100-day EMA.