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FTSE 100 nears key resistance level despite Covid-19 and Brexit fears

The blue-chip index had a strong performance this week despite Covid-19 and Brexit concerns, with it capable of breaking above 6000 points if UK stocks can carry their positive momentum forward into next week.

  • FTSE 100 rally continues this week despite Covid-19 and Brexit concerns
  • Blue-chip index continues to drive higher, with key resistance up ahead

The FTSE 100 has rallied 6% this week despite rising Covid-19 cases leading to the UK government imposing a second national lockdown and investors growing increasingly concerned about the economic impact of Brexit.

After yet another positive performance, the blue-chip index has recorded its best weekly gain since early June, spurred on by the Bank of England’s decision to step up stimulus measures in a bid to support the UK economy weather the impact of Covid-19 and another lockdown.

The FTSE 100 is trading at 5910 points at the time of publication, with the blue-chip index down 22% year-to-date.

FTSE 100: risers and fallers

Mining companies like Glencore, Rio Tinto and Anglo American, led the move higher for the blue-chip index due to a potential bull market in commodities coming down the pipe as a result of further economic stimulus by central banks and supply shortages.

‘Glencore has delivered a solid third quarter operating performance, including the continued successful ramp-up of Katanga, which remains on track to achieve design capacity by year end,’ Glencore CEO Ivan Glasenberg said. ‘We maintain our 2020 full year production guidance, except coal, which was adjusted for the extended strike at Cerrejon.’

‘We will provide a detailed business update, including progress on climate change initiatives at our investor update on 4 December,’ he added.

At the other end of the market, Rolls-Royce Holdings continues to see its share price come under further pressure, falling 6.3% on Friday and down 70% year-to-date. The British engineering company’s latest shares tumble came as its massive job-cutting programme begun to accelerate.

Rolls-Royce plans to reduce its headcount by almost 1400 in its civil aerospace division, with the unit hit hard by the coronavirus pandemic which has created complete chaos for the travel and aviation industry.

FTSE 100: technical analysis

The FTSE 100 is on the rise once again this morning, with the index having seen an impressive recovery over the course of the week thus far, according Josh Mahony, senior market analyst at IG.

‘That rise has taken us back into the 76.4% Fibonacci resistance level, bringing the wider bearish trend into question,’ he said. ‘Ultimately that trend does still hold until we see a rise through the 6041 swing-high.’

‘As such, the forthcoming period will be very telling, with a reversal from Fibonacci resistance or rally through 6041 paving the way for the next major move,’ Mahony added.

How to trade the Weekend UK 100

Did you know? You can trade forex and major indices like the Weekend UK 100 (based on the FTSE 100) during Saturday and Sunday with IG. Our world-leading trading platform is the only solution to offer weekend trading on indices.

Whether you want to go long (buy) or short (sell) the Weekend UK 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.

Ready to start trading indices? Open a live account or practise using a demo version today.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. 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.

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