The FTSE 100 Index Futures have continued their recent downward trend, and reached its lowest levels since the 5th of January this year. On Monday it dropped to PS9800, down 10% from the highest point of this year. It has now officially entered a correction.
The FTSE 100 Index: Top Reasons for Falling
The Footsie Index has fallen this year for two main reasons. One of the most significant is that global indexes have been heavily affected by the current Iran War.
In Europe, for example, the top indices such as the German DAX (Germany’s DAX), French CAC 40 and Spanish IBEX all fell by almost 10% since their peak levels in this year.
In the United States the same thing is occurring. Futures linked to Dow Jones, S&P 500 and Nasdaq 100 indexes all fell Monday. All three indices are down sharply since their peak levels in this year.
The FTSE 100 Index also fell because of actions taken by the Bank of England. This is due to a situation called stagflation which occurs when the inflation rate is increasing while the economy is slowing down.
This week, data is likely to reveal that UK inflation was above the target rate of 2.0% last month. Gas prices have risen by 104% in this year, which will continue to drive inflation. Brent crude oil, which is the benchmark for the world, has also surged, from a year-to date low of $55 to $112 today.
The main fear of a central banks is Stagflation. Inflation is often high when interest rates are cut to boost economic growth, but low inflation occurs when rates are raised to reduce inflation.
The majority of FTSE 100 Index Companies have fallen this year. Barratt Redrow’s stock price has fallen by 32 percent this year, as developers continue to cut prices.
EasyJet’s stock price has fallen by 30 percent this year, as the cost of jet fuel continues to rise. This will have an impact on its margins in time.
Entain’s stock price has fallen by 29%, as companies such as Polymarket and Kalshi continue to gain market share. DraftKings, Flutter and other betting companies have all also seen their stock prices plummet in recent months.
Other top laggards on the FTSE 100 Index include Intertek Group (also known as Sage Group), Experian Group, Barclays and Burberry Group. These companies all have a fall of over 22% in the past year.
Some companies, on the other hand have had a good year. Beazley’s stock rose by 50 percent after Zurich acquired it, a large insurance company. Schroders’ stock has increased by 40% since Nuveen acquired it.
The stock of BAE Systems has increased by 31% in the past year, as the war against Iran will increase demand. Other top gainers include BP, Glencore Shell, Centrica and BT Group.
Footsie Index chart analysis
Footsie Index chart | Source: TradingView
Daily timeframe charts show that the FTSE 100 Index is down from its year-to date high of PS10920 in last month’s chart to PS9800 at the moment.
The index is now below PS10,080. This was its lowest point on March 9, this year. The index has fallen below the Fibonacci Retracement of 23.6% at PS10116.
The Index fell below both the 50-day Exponential Moving Averages and the 100-day Exponential Moving Averages, while the Relative Strength Index moved near the oversold 30 level.
The stock is likely to continue dropping in the short term. It could even reach the Fibonacci retracement 50% level of PS9,225. Later this year, when signs of the end of war are evident, it will bounce back.
The post FTSE 100 Index Futures Enter Correction as Top UK Shares Plunge may be updated as new information unfolds.
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