FTSE 100
FTSE 100 slipped by more than 1.1% as investors remained wary about the rising tensions between the United States and China. The index is trading at £6,150, which is lower than this week’s high of more than £6,234. The biggest laggard in the index was Rolls Royce, whose shares fell sharply following a debt downgrade earlier this week.
Rolls Royce, one of the iconic brands in the United Kingdom is under pressure. The firm shares dropped by almost ten per cent a day after its debt was downgraded to junk by S&P 500. The stock has dropped by more than 22% in the past three days.
In a statement yesterday, S&P said that the firm would have a prolonged period of weak profitability. It will also see its backlog severely hurt by the current crisis in the aerospace industry.
The company has been in crisis since March, when global travel stopped. Many of its clients have continued to suffer while others like Virgin Australia and Latam Airlines have gone out of business. As a result, the firm has moved to manage costs by slashing employees.
Rolls Royce shares are now trading at £288, down from the YTD high of more than £700.
Carnival was another big loser in the FTSE 100 as the company continues to struggle. The shares are down by more than 80% this year as the cruise line business has been hit hard by the crisis. There is talk that the company, together with EasyJet will exit the prestigious FTSE index. Other top losers were Melrose Industries, Compass Group, EasyJet, Burberry, and Johnson Matthey.
On the other hand, the biggest gainers in the index were United Utilities, Rio Tinto, AstraZeneca, and British Land. The latter company rose by more than 2% after Canadian investor, Brookfield Asset Management took a 7% stake. The deal will expand Brookfield into the UK, where it owns substantial assets.
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The FTSE 100 is trading at £6150, which is slightly below the week’s high of £6,234. The high was along the 50% Fibonacci retracement level on the daily chart. The price is slightly above the 50-day EMA and slightly below the 100-day EMA. The overall trend of the index is bullish but bulls will need to move above the 50% retracement at £6,234.
On the flip side, a move below £5,884 will invalidate this prediction. This price is at the intersection of the 38.2% retracement and the lowest swing on March 22.