FTSE 100 could see a resurgence in the Easter weekend markets
Trader confidence appears to be returning to the FTSE 100, despite the fact that UK Covid-19 cases are expected to peak during the Easter weekend.
Prior to the Easter weekend, the FTSE 100 soared by 2.3% at opening on Thursday, with investors also reacting positively to a shock announcement from the Bank of England (BoE).
The BoE confirmed it would be extending its overdraft-style facility with the UK government. The move indicates that the bank is prepared to cover a large chunk of additional spending necessary during the coronavirus crisis.
Not since the 2008 financial crash has the BoE utilised its overdraft facility to such an extent.
Traditionally, the UK government is permitted to borrow upwards of £400 million at a time, but the BoE’s facility was maxed-out in 2008, allowing the government to borrow £19.9 billion.
FTSE 100 technical analysis: bullish continuation move
On Wednesday, the FTSE 100 maintained its 5574 support level, with the index continuing to rally ever since, giving hope that a 'bearish head and shoulders pattern' could give way to a 'bullish continuation move'.
Joshua Mahony, senior market analyst at IG, said: 'The FTSE 100 failed to break the 5574 support level yesterday, with the index rallying since.'
'That level would have seen a bearish head and shoulders pattern formed, yet we are instead faced with the possibility of a bullish continuation move as the index heads towards a key area of resistance.'
This refers to the horizontal resistance at 5782 and 5828, which Mahony believes are 'key hurdles to overcome' in the battle to 'break from this period of consolation'.
Learn more about weekend trading.
UK supermarkets’ sales rise, but Tesco downgraded
Following a spate of panic buying, supermarket sales in March sky-rocketed, and UK supermarkets have been some of the better FTSE 100 performers since market volatility began.
It could be argued that Tesco stand in good stead, given that its group is set to become £8 billion stronger by selling off the Asian arm of its business. The arrival of new CEO Ken Murphy could also provide fresh impetus to the brand ready for the long term once the pandemic passes.
Whether the 'significant additional costs' that the likes of Tesco and Sainsbury’s are incurring, due to the coronavirus outbreak, will harm pre-tax profits for the year to February 2021 remains to be seen.
Analysts appear to be taking a cautious view, despite the likely flurry of bank holiday sales. After Tesco’s annual results this week, analysts downgraded the supermarket.
How do I participate in weekend trading?
Unlike most UK brokers, who only offer Monday to Friday trading on the FTSE 100, IG offers 24/7 weekend trading on the blue chip index, as well as the Dow Jones, DAX, and GBP/USD. This extends to a range of other assets, including a variety of indices and forex markets.
With market volatility on the rise due to the Covid-19 pandemic, it’s more important than ever to be in complete control of your trading positions. Weekend trading with IG allows you to speculate across the weekend, or hedge your weekday positions by opening a weekend position on the same market.
Our weekend markets give you ultimate flexibility to be agile and reactive to fundamentals, such as breaking news on the coronavirus outbreak so that you never miss a chance to trade the FTSE 100.
Please note that, while weekend markets will be open on Saturday and Sunday, they will be closed on Good Friday and Easter Monday.
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. See full non-independent research disclaimer and quarterly summary.
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