FTSE 100: Will JD Sports Save Philip Green’s Arcadia Group?

Summary:

The biggest focus on the FTSE 100 will be JD Sports, the fashion comany that is in pole position to save Philip Green Arcadia group

The FTSE 100 is starting the final month of the year on the front boot as hopes of a Brexit deal and a Covid vaccine boosts sentiment. Investors are also hoping that the well-known Santa Claus rally will repeat itself this year.

The biggest focus in the FTSE 100 will be JD Sports, the giant retailer that is valued at more than £7.5 billion. The company has emerged as a leading contender in the latest talks to save Philip’s Green Arcadia Group. That is after the company, which owns brands like Topshop, Topman, and Dorothy Perkins, moved into administration putting more than 13,000 jobs at risk.

Just yesterday, JD announced that it was walking away from a deal to rescue Debenhams, a high street fashion icon that moved into administration early this year. Such an acquisition will be possible for JD, which is a well-capitalised group with more than £250 million in net income.

The FTSE 100 is also rising as traders focus on the reshuffle that will happen tomorrow. As I reported yesterday, Weir Group and Bill Ackman’s Pershing Square Holdings, were in a pole position to become the next members of the index. Further, investors will focus on Lloyds Bank, whose current CEO is set to become the next Credit Suisse Chairman.

Also, the market will watch out for IAG, the owner of British Airways, which is expected to miss out on Covid vaccine supply. In a note to investors, HSBC aviation analyst said that the airline will not benefit from delivering the vaccine because of its limited cargo jobs.

FTSE 100 technical outlook

On the daily chart, we see that the FTSE 100 index managed to move below the lower support level at £6,290. Today, its futures have moved back to the bullish flag. It also remains above the 50% Fibonacci retracement and the 25-day moving average. In the next few days, we cannot rule a situation where the price tests the upper side of the flag at £6,483 and then continues to push higher.

At the same time, if it closes below yesterday’s low of £6,250, it will mean that bears have started to reassert themselves, which could see it continue moving lower.