FTSE 100 could see gains eroded in weekend markets
The blue-chip index managed to rebound above 6000 this week, but the benchmark’s gains could be eroded over the weekend with investors worried about a second wave of coronavirus cases as the UK economy reopens.
The FTSE 100 closed marginally lower on Thursday at 6015.25 points, with the index capable of extending its losses on Friday and over the weekend.
Over the last four sessions the benchmark has gained 3.8%, but investors are concerned about a second wave of coronavirus cases as the UK economy gradually emerges from lockdown.
FTSE 100 futures are trading slightly lower at 6029 at the time of publication, suggesting that the index will open in negative territory on Friday.
FTSE 100 bounce runs out of steam
The bounce from Thursday’s lows has stalled, with the FTSE 100 price falling back yesterday, according to Chris Beauchamp, chief market analyst at IG.
‘If it can hold 5920 then a move higher may resume, targeting 6140 and then 6200, the peak from the end of April,’ Beauchamp said.
‘Having twice held 5650 this month, sellers will need to drive the index below this level to ensure a bigger drawdown develops,’ he added.
US-China trade tensions return
Remerging tensions between the world’s two largest economies will likely take its toll on UK stocks, with Washington highly critical of China’s handling of the Covid-19 outbreak.
On Wednesday, US President Donald Trump announced that he had approved a potential $180 million arms sale to Taiwan, a decision that will likely anger Beijing and worsen relations between the two countries.
‘The proposed sale will improve the recipient's capability in current and future defensive efforts,’ the Trump administration said in a statement. ‘The recipient will use the enhanced capability as a deterrent to regional threats and to strengthen homeland defence.’
Investors also had to digest new economic data that showed the UK economy had contracted again in May, according to research carried about by IHS Markit.
Earlier this month, the Office of National Statistics (ONS) said that UK economic growth declined by 2% in the first quarter (Q1) 2020, with researchers at NIESR forecasting Q2 growth to decline as much as 30%.
How to trade indices with IG
Create an IG trading account or log in to your existing account
Enter ‘FTSE 100’ in the search bar and select it
Choose your position size
Click on ‘buy’ or ‘sell’ in the deal ticket
Confirm the trade
How to trade the FTSE 100 this weekend
Did you know? You can trade forex and indices like the FTSE 100 during Saturday and Sunday with IG. Our world-leading trading platform is the only solution to offer weekend trading on indices. Using CFDs, you can be agile within our weekend markets. Whether you want to go long (buy) or short (sell) the FTSE 100 based on the above outlook, you don’t have to wait until the markets reopen on Monday to trade.
The weekend prices for indices and forex are quoted separately to their weekday counterparts, based on our view of the prospects for that market given client business and news flow. As a result, you can use these markets to hedge against risk on your weekday positions.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 30
- The only provider to offer 24-hour pricing
Live prices on most popular markets