FTSE 100 Caught Under 6,800 as Rising Yields Put Strain on Shares

Key Speaking Factors:

• Enhancing financial knowledge is seeing bond yields rise and placing stress on equities
• The FTSE 100 is caught beneath key resistance as consumers wrestle to maintain the optimistic momentum going

Continued robust financial knowledge and outlook within the US are pushing European equities greater regardless of the approaching risk of a 3rd wave of Covid-19 circumstances in Europe. A robust rise in shopper confidence launched yesterday was the most recent of a bunch of robust knowledge being launched within the US, which is, in flip, elevating inflation expectations and bond yields.

The newest ADP employment studying will probably be launched this afternoon and expectations are for an increase in employment within the month of March, which might then see the US 10 yr bond yield push above 1.8% for the primary time since February 2020. In that case, fairness markets might come below stress within the US, most certainly spilling over into European shares, so anticipate a barely weaker end to this shortened week.

FTSE 100 Ranges

The FTSE 100 has struggled to maintain up with the optimistic momentum seen in Europe this week because the index continues to commerce beneath the 6,800 resistance line. It has been unable to soak up the bullish spill-over from the US however is shortly changing into delicate to the correction in fairness markets since final night time, so draw back dangers are extra outstanding at current.

The ultimate studying for This fall GDP was launched this morning and it could have saved the FTSE 100 from additional losses as the info confirmed that the UK financial system grew 1.3% within the final Three months of 2020, coming in higher than the 1% anticipated and avoiding a double-dip recession.

Regardless of the dangers of a 3rd wave of Covid-19 in Europe and a pointy rise in bond yields, European equities stay skewed to the upside, and the FTSE 100 is following swimsuit regardless of missing a robust bullish drive. The ascending trendline from the January 2021 lows is retaining consumers supported within the meantime, with short-term resistance discovered at 6,656, the place the 200-day SMA converges. Extra quick help may be discovered at this week’s swing low (6,730).

The Fundamentals of Technical Evaluation

To the topside, the 6,800 resistance continues to supply robust promoting stress so there it’s doubtless that the index will want dip consumers to seem inside a higher retracement to get above this space. A fall in the direction of 6,600 – and even the 61.8% Fibonacci retracement at 6,489 – can be an excellent alternative for brand new consumers to deliver the index greater, though a break above 6,810 is required to consolidate additional bullish momentum. Any additional than that and the 76.4% Fibonacci at 6,894 is prone to be the subsequent hurdle for consumers.

FTSE 100 Day by day Chart

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— Written by Daniela Sabin Hathorn, Market Analyst

Observe Daniela on Twitter @HathornSabin