The FTSE 100 is up by almost 1% as investors welcome the final quarter of the year well. The index is trading at £5,920. Other indices in Europe like the DAX index and Euro Stoxx 50 are also in the green.
The biggest laggard in the FTSE 100 is Rolls Royce, the giant aircraft engine manufacturer. Its share price is down by 3.8% and is trading at 125p. The company has been in trouble because the industry it operates in is facing existential threats.
For starters, Rolls Royce is a renowned jet engine manufacturer. It focuses mostly on large engine jets like A380, which are mostly used in long trips across the world. However, the firm does not make a substantial amount of money selling engines.
Instead, it enters into long-term contracts with airlines to service the planes. Now, with most large aircrafts idle, the industry has largely dried up. That has put intense pressure on the firm, which has helped push its share price to the lowest level in more than a decade.
Hospitality-related companies in the FTSE 100 are among the worst-performers today. British Airways-owner, IAG is among the worst-performers in the index. Intercontinental Hotels and Just Eat Takeaway are other weak performers. All this is because investors are worried about the recovery as the number of Covid-19 cases rise.
On the other hand, financials are among the best-performers in the FTSE 100. Standard Life Aberdeen, Legal & General, M&G, Prudential, and London Stock Exchange are the best-performing stocks in the index today.
The FTSE 100 has also been supported by the weaker British pound. The sterling is down by 0.25%, which is a good thing for constituents of the index.
The FTSE 100 index is trading at £5920 today. The daily chart shows that the index has moving in an equidistance channel in the past few weeks. Also, the price is slightly above the 38.2% Fibonacci retracement level and is a few points below the 25-day exponential moving averages.
Therefore, in the near term, I expect the index will remain inside this channel. A move above the resistance at £6,000 will open the possibility for the index rising to the 50% retracement at £6,250. On the flip side, a volume-supported decline below £5,600 will see the price continue falling.
