Risk appetite brought about by decreasing coronavirus cases put investors in a risk-on mood and helped FTSE 100 close higher. At the end of today’s trading, UK’s stock index was up by 3.08% or 166.9 points at 5,582.4.
Melrose Industries led gains as it closed with a 17.54% profit for the day. Barratt Developments was the second-biggest gainer at +16.68%. In third was Rolls Royce with a 16.65% uptick. This follows after the company announced that it will not issue dividends. Legal & General, on the other hand, defied the Bank of England’s (BOE) calls to forgo dividends. The insurer announced that it would pay its final dividend of 12.64.
All eyes are now on supermarket giant Tesco, to see if it will also pay dividends. Some blue chip companies have decided not to pay dividends to save capital. However, Tesco is expected to announce a rise in its annual profits from £1.56 billion to £1.85 billion on Wednesday. With this it is expected that the company has enough liquidity to pay its shareholder dividends.
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On the 4-hour time frame, it can be seen that FTSE 100 CFDs has recently made higher lows. Because they follow a series of lower lows, an inverse head and shoulders pattern has materialized. This is considered as a bullish reversal pattern. If the bullish momentum can be sustained, FTSE 100 could rally to 6,444.6 where it bottomed on February 28 and March 6.
However, it’s imperative for FTSE 100 to break the neckline resistance around 5,795.9 in order for the inverse head and shoulders to be completed. If it does not, it could mean that the stock index may have room to trade lower. Near-term support is at 5,351.5 where it bottomed on April 3. This price also coincides with the 100 SMA.