IAG and Rolls Royce Shares Drag FTSE 100 Lower as Miners Provide Support

Summary:

The FTSE 100 index declined today because of the weakness in the Rolls Royce and IAG shares. Mining stocks like Fresnillo provided the much needed support

The FTSE 100 is down by 0.15% today as investors reacted to the sell-off in US stocks yesterday. The index is trading at £5950, which is lower than August’s high of £6512. Other indices in Europe are in the green, with the DAX index, CAC 40, and Stoxx 50 rising by 1.27%, 0.85%, and 1.13%, respectively.

Rolls Royce share price is the worst-performing stock in the FTSE 100 today. The shares are down by more than 6.22% as investors react to the problems facing the company. This is after the company announced a plan to raise £2 billion by issuing more shares. The new funds will dilute existing shareholders at a time when international travel is still struggling. Rolls Royce stock is trading at 225p.

IAG, the owner of British Airways, is another top laggard in the FTSE 100 today. That is because of fears that the future of international travel remains in peril because of the coronavirus pandemic. The firm’s shares are trading at 204p.

Other top laggards in the FTSE 100 today are banks like Lloyds, HSBC, Standard Chartered, and Barclays. Thee shares are down by more than 2%.

On the other hand, commodities companies are the best-performing today. That is mostly because commodities like silver, gold, copper, and platinum have all rallied by almost 2%. Shares in Fresnillo, Polymetal, Glencore, and Antofagasta have all rallied by more than 1%.

FTSE 100 technical outlook

The daily chart shows that the FTSE 100 peaked at £6,503 in June this year. Since then, it has been in a slow downward trend and reached an intraday low of £5860 today. This was an important low because it is along the 38.2% Fibonacci retracement level. It is also along the lowest level on August 3. The price remains below the 50-day and 100-day exponential moving averages.

Therefore, the pair is likely to continue falling as bears attempts to move below the support. On the flipside, a move above the 50% retracement at £6237 will invalidate this trend.