FTSE 100 price, news and analysis:
- The Bank of England seems increasingly unlikely to increase UK interest rates next Thursday as the UK Government announces new measures to curb the Omicron variant of Covid-19.
- That’s positive for the FTSE 100 index of the major London-listed stocks.
FTSE 100: more gains to come
The FTSE 100 index is well placed to extend its recent run higher ahead of the Bank of England’s decision on UK interest rates next Thursday. Once seen as almost certain, a rate hike has become less likely because of the spread of the coronavirus Omicron variant.
That’s positive for UK stocks even though the Government has already responded by tightening the pandemic rules in England. Masks will now have to be worn in most indoor public places and employees have been told to work from home if they can.
As the chart below shows, the index is now close to the November 12 high at 7,405, and if that is breached it will be back at levels not seen since February 2020.
FTSE 100 Price Chart, Daily Timeframe (July 8 – December 9, 2021)
Source: IG (You can click on it for a larger image)
UK GDP figures due
Turning to UK economic news, the next important data will be tomorrow’s GDP, industrial production and trade figures. Economic growth year/year is expected to have eased to 4.9% from the previous 5.3% while the deficit on trade in goods is expected to have fallen marginally and industrial production to have fallen.
Retail trader data bullish
As for the IG positioning figures, the latest retail trader data show35.24% of traders are net-long the FTSE 100, with the ratio of traders short to long at 1.84 to 1. The number of traders net-long is 5.67% lower than yesterday and 53.12% lower than last week, while the number of traders net-short is 10.35% higher than yesterday and 180.88% higher than last week.
Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests the FTSE 100 may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger FTSE 100-bullish contrarian trading bias.
— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex