FTSE 100 futures set to fall as no-deal Brexit fears rise

FTSE 100 futures are down on Thursday suggesting UK stocks will extend losses this week, while the Bank of England left rates unchanged and expressed concern that Covid-19 and the unwinding of furlough could derail the economy.

  • FTSE 100 rolls over into key support level
  • Bank of England leaves interest rates unchanged at 0.1%
  • The blue-chip index likely to suffer a ‘no deal’ Brexit scenario

FTSE 100 futures are down on Thursday suggesting UK stocks will extend losses this week, while the Bank of England (BoE) opted to leave interest rates unchanged at 0.1%.

The BoE warned that the UK economy could find itself in serious trouble amid rising coronavirus cases and the government’s furlough scheme coming to an end in October.

‘The outlook for the economy remains unusually uncertain,’ the Monetary Policy Committee (MPC) said in a summary of its meeting.

The central bank also said that the uncertainty surrounding Brexit is making it difficult to make economic forecasts and admitted the UK economy faces a myriad of headwinds.

‘Recent domestic economic data have been a little stronger than the Committee expected at the time of the August Report, although, given the risks, it is unclear how informative they are about how the economy will perform further out,’ the MPC said.

The FTSE 100 closed marginally lower at 6049 points on Thursday, with the index down 20% year-to-date.

What to expect when Brexit bites

The return of Brexit as a major market issue after a break of several months promises to increase volatility for UK investors, explains Chris Beauchamp, chief market analyst at IG.

‘The FTSE 100 has struggled to make headway since June, and along with the FTSE 250 could well suffer in a ‘no deal’ scenario,’ he said. ‘Meanwhile after a strong rally against the dollar in recent months the pound looks vulnerable, while EUR/GBP is also likely to see a pickup in intraday swings.’

‘UK investors should remember that there are a host of other indices around the globe, which could offer a degree of calm away from Brexit-related turbulence,’ he added.

For a more detailed look at how Brexit may impact UK markets click and watch IG’s chief market analyst Chris Beauchamp’s run down on what to expect when Brexit bites

FTSE 100: technical analysis

The FTSE 100 started to turn lower, following a period of gains that took the index into a deep retracement of the selloff from 6297, according to Josh Mahony, senior market analyst at IG.

‘The wider downtrend in play over recent months serves to remind us that this recent rally always looked like it could be on borrowed time, with a break through the 6297-6324 zone required to bring wider recovery signal,’ he said. ‘However, with price now having tentatively broken below the first swing-low of this recent intraday uptrend, we have seen a signal that the recent rally may be over.’

‘This may not mean an immediate slump from here, yet any short term rebound could provide false hope as the trend starts to turn around,’ Mahony added. ‘As such, a bearish outlook is in play here, with a break through 6127 required to bring a bullish continuation signal.’

FTSE 100: after-hours trading with IG

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