FTSE 100 Stumbles as Updated Travel List Looms
Key Talking Points:
- The UK Government is set to update the travel list at some point today
- European airlines drop as concerns grow over limited countries added to the green list
- FTSE 100 reverses yesterday’s gains but keeps bullish momentum for now
The FTSE 100 has held on to gains in the last few sessions but is lacking a clear direction. We have seen the index try and stick to the ascending trendline from the lows back in February but support hasn’t been fully sticking as of yet.
The FTSE 100 was on a strong bullish run during the first quarter of the year as the vaccine program in the UK was picking up pace against its European counterparts, but that strong momentum has started to fade away as the Indian variant is threatening to halt the easing of lockdown restrictions that is currently taking place. Despite there being no new Covid-19 deaths in the last few days, there are still a concerning amount of new infections cantered around hotspots of the Indian outbreak, causing for health experts to call for a delay in easing lockdown measures.
With the FTSE 100 index being heavily dominated by domestic stocks, the current situation in the UK is of importance for its performance, and so is any delay in reopening the economy. In addition, the UK government is set to announce its updated travel list at some point during the day, so we can expect travel stocks to be highly volatile throughout the session. Looking at the likes of IAG, Easyjet and Ryanair, they are trading in the red this morning as investors anticipate there will be no major changes to the green list, at least not with European tourist hotspots like Spain, France and Greece, where these low-cost airlines make most of their business.
FTSE 100 Levels
The selloff leading on from the Asian session has erased yesterday’s gains as the UK index nears its first line of support at 7,042. If breaks below this area, the FTSE 100 will have returned to its previous range where it traded sideways for over a week, with focus on the 7,000 mark as the key area for short-term support. The stochastic and MACD indicators are showing that there is still room for the FTSE 100 to build on before overbought conditions become an issue so I’d be looking for a break above recent resistance at 7,122 as confirmation that buyers are willing to take the index higher. If so, the recent 15-month high at 7,167 is likely to be an important area as momentum builds towards 7,200.
FTSE 100 Daily chart
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.