FTSE 100
The FTSE 100 index was barely moved today as the three-day rally took a breather. As of this writing, the index is trading at £6,385, which is a few points above the opening price. Nonetheless, the index has outperformed other European indices like the DAX index, CAC 40, and Stoxx 40, that declined slightly today.
The biggest laggard in the FTSE 100 was Intermediate Capital, the money manager that manages more than £45 billion. The shares dropped by more than 10% after the company released its quarterly results that showed an increase in assets under management but a 37% decrease in profit.
According to the firm, the AUM rose by more than 22%, with more than £10 billion raised. It blamed the sharp decline in profit to the decline in valuations of its holdings. This means that the firm could return to growth soon because share prices have jumped. The company also hiked its dividend by 13% to 50.8p per share.
Rolls Royce share price declined by more than 3% as the company revealed how it will slash its costs.The firm said that it will shed more than 3,000 jobs in the UK to go due to the coronavirus pandemic. This will be the first wave of the cuts with others planned in 2020. In the statement, it said that sites across the UK will see reductions of between 50 and 200 job cuts. The firm, which received a credit downgrade last week, is seeing significant impact from the virus, which has halted most of global travel.
The FTSE 100 is also reacting to the ongoing Brexit talks which started on Tuesday. Most analysts believe that the two sides will not reach an agreement. Still, others believe that Boris Johnson will be pressured to request a shorter Brexit extension. He will possibly blame the ongoing coronavirus pandemic. This issue matters to FTSE companies because a no-deal Brexit will reduce their market in Europe.
Retailers like Ocado and Tesco share prices rose today. The same was true with other consumer focused companies like Reckitt Benckiser, Associated British Foods, Diageo, and Unilever. Analysts believe the rally is mostly because Johnson will request a Brexit extension.
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On the daily chart, the FTSE 100 is trading above the 50% Fibonacci retracement level and the 100-day exponential moving averages. The price is also slightly below the important resistance level of £6,400. Therefore, the index may continue rallying but bulls will need to move above this resistance level.
On the flip side, a move below £6234 will invalidate this prediction. This price is along the 50% retracement level. It will mean that there are more sellers in the market, who will be keen to push it lower.