The FTSE 100 index made marginal gains on Wednesday as a stronger pound sterling weighed it down. The Index was at 7937.44, having gained a minuscule 0.03%, with the psychological 8000.00 evasive once more. It momentarily touched a year-to-date high of 8015.53 on Tuesday, but a return seems more difficult for the exporter-dominated index now that the pound seems to be strengthening against the US dollar.
While many investors agree that FTSE 100 is undervalued, the UK’s struggles with its economy have made it difficult for the index to realise its true value. It has gained about 6.45% so far in 2024. In comparison, the S&P 500 is up by 9.04%, while Germany’s DAX 40 has gained 9.38%.
There is growing consensus that the BoE could cut interest rates sooner rather than later, as inflation rates have been on the decline for a while. This could help strengthen the FTSE 100, as it is widely feared that higher-for-longer interest rates could hurt the UK economy reeling from a technical recession. With the earnings announcements around the corner, we are likely to witness significant movements in the FTSE 100 index.
Rising oil and gold prices could also keep the FTSE 100 on the ascending trajectory, considering that energy and mining companies dominate the index. Brent crude has gained 2.83% over the last week to trade at $89.39 as of this writing. This is reflected in Shell’s weekly gains of 4.53% and daily gains of 1.10% as of this writing. Elsewhere, gold prices rose to record highs of $2,300 per ounce on Wednesday, while copper prices gained 3.03%. Anglo American shares are up by 4.93% on the weekly chart, while Antofagasta has gained 2.99% as of this writing.
Technical analysis
FTSE 100 will need to stay above the 7957.1 pivot to sustain its upward momentum. The RSI indicator shows that the buyers are in control, and this could see them break the resistance mark at 7979.2. If that happens, the index could climb further to test 8016. 9. Alternatively, the downside will prevail as long as resistance remains below 7957.1. That will signal control by the sellers, who could break the support at 7916.7. A continuation of the control at that point could see a decline to 7888.2.
