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MARKET ANALYSIS for FTSE100 || March 6, 2020

Market activity on the FTSE100 continued to be dominated by coronavirus The selloff on the FTSE100 continued this week after last week’s bloodbath. The week started where it ended the previous week, with more cases of the novel coronavirus (nCOVID-19) being reported around the world.

 

Wednesday saw some reprieve for the global stock markets, as hopes for a coordinated response from the major central banks grew. This was capped by the emergency action of the Fed by reducing interest rates in the US by 50Bps to 1.25%. This spurred some recovery on the FTSE100. However, market optimism quickly dissipated on Thursday as feelers from the BoE indicate that the bank would not be stampeded into making any emergency rate cuts.

 

Stocks of companies associated with the travel and hospitality sectors, as well as luxury brands continue to find the going quite tough.

 

The top gainers on the FTSE100 for the week are:

  • Polymetal International (10.13%)
  • Morrison (Wm) Supermarkets (8.12%)
  • Astrazeneca (8.00%)
  • Sainsbury (J) (6.64%)
  • Tesco (6.24%)
  • Unilever (5.58%)
  • Reckitt Benckiser Group (5.46%)
  • Imperial Brands (5.16%)

 

Stocks of cruise ship company Carnival dropped 16.84% to be the FTSE100’s top loser, after a female elderly passenger on the Grand Paradise cruise ship died of the coronavirus. That cruise ship remains quarantined off the coast of San Francisco. Also, Carnival announced yesterday that two of its units were cyber-attacked in May 2019, further compounding the woes of investors on this stock.

 

Other top losers include:

  • Evraz (-15.35%)
  • Informa (-14.93%)
  • Tui AG (-14.82%)
  • International Consolidated Airlines Group (SA) (-14.62%)
  • ITV (-14.55%)
  • Royal Bank of Scotland Group (-13.66%)
  • EasyJet (-12.63%)
  • Whitbread (-12.34%)

All price gains and losses are current as at 10.50am GMT.

 

Technical Outlook for FTSE100

The FTSE100 continues to be in the red this week, as concerns over the spread of the coronavirus continue. In the UK, the Premier League has placed a temporary ban on the customary handshake before games; this shows the extent of concern over the problem.

FTSE100 Weekly Chart: March 6, 2020

The price action on the daily chart reveals that the presence of a small ascending channel, which encapsulates this week’s price action. Friday’s bearish start to the trading session has taken the FTSE100 below this channel in an intraday violation. However, the FTSE 100 needs to confirm this move. A 3% penetration close below the channel on the weekly chart or a double successive daily candle close below this channel is the confirmation required.

 

FTSE100 Daily Chart: March 6, 2020

 

The 4-hour chart shows a clearer picture of the intraday price action, where we can see the FTSE100 heading steadily lower. The RSI continues to point downwards and still has room for a run to the oversold area.

 

Sellers would be looking for a confirmation of the channel breakdown. This would open the path towards the short-term support target at 6517.5 (7 Nov 2016 and 26 Dec 2018 lows). This support was tested last week but held firm; another test looks likely. A breakdown of 6517.5 allows 6446.0 to come into play, being the previous lows of 6 July 2015. Below 6446.0, further support lies at 6373.5, 6204.6 and 6015.5.

 

On the flip side, if 6517.5 continues to hold, then a pullback towards 6739.2 (28 Jan 2019 low and lower barrier of channel) could be the next resistance target. Further recovery brings 7006.3 into focus; a possible price target if price re-enters the channel.

 

Bulls

A return to bullish action has to be followed by a break of 7006.3 to the upside.

 

Bears

A breakdown of 6517.5 opens the door for more downside on the FTSE100.

 

Prices to watch: 7006.3 (bulls) and 6517.5 (bears).

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.


Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.

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