The FTSE 100 Index crashed by over 1.25% today, Nov. 4, reaching a low of £9,580, its lowest level since October 24. It has plunged from the year-to-date high of £9.780 as global stocks retreated.
Why the FTSE 100 Index crashed
The Footsie Index retreated as global equities plunged after major warnings by top executives on the stock market rally. Top bankers like Goldman Sachs’ David Solomon and Morgan Stanley’s Ted Pick warned that the stock market was on the verge of a pullback.
In Europe, the German DAX dropped by 1.62%, while in France, the CAC 40 dropped by 1.60%. Other indices like the Euro Stoxx, AEX, FTSE MIB, and IBEX 35 were all down by over 1.50%.
Most companies in the FTSE 100 Index were in the red, with the top laggards being miners. Antofagasta stock tumbled by 4%, while Anglo American, Glencore, and Rio Tinto fell by over 2.5%.
Other top laggards were companies like Associated British Foods (ABF), JD Sports, Burberry, and Diploma.
The FTSE 100 Index has also plunged because of worries that the UK government will implement higher taxes later this month. In a statement, Rachel Reeves, the Chancellor of the Exchequer, hinted that she was prepared to hike taxes, which are already high. She said:
“If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit.”
Bank of England decision and earnings
Looking ahead, the next important catalyst for the FTSE 100 Index will be the upcoming Bank of England (BoE) interest rate decision scheduled on Thursday.
Economists expect the central bank to leave interest rates unchanged at 4% because of the elevated inflation. The most recent data showed that the headline Consumer Price Index (CPI) remained above 3.8% in September. As such, it will be hard for the bank to cut rates as that will lead to higher inflation.
The FTSE 100 Index also retreated after the latest Palantir earnings sent jitters in the financial markets. As we had predicted before the results, the Palantir stock price crashed after reporting strong earnings. This performance is notable as the company is one of the top players in the artificial intelligence industry.
Looking ahead, the FTSE 100 Index will react to some notable corporate earnings. Marks and Spencer, the giant retailer will publish it results on Wednesday.
The other key earnings to watch on Thursday are AstraZeneca, National Grid, BT Group, Sainsbury, and Wise. IAG, the parent company of British Airways and Aer Lingus will publish its numbers on Friday.
FTSE 100 Index technical analysis
The daily chart shows that the FTSE 100 Index has pulled back from the all-time high £9.780 to the current £9,600. This retreat happened after it retested the upper side of the ascending channel, which is a common occurrence.
It remains above the 50-day and 100-day Exponential Moving Averages (EMA), which is a bullish sign. Therefore, the most likely scenario is where it retreats and retests the lower side of the channel and then resumes the uptrend.
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