FTSE 100 closes around breakeven as PM Johnson presents a plan to ease the lockdown

FTSE 100 closes around breakeven as PM Johnson presents a plan to ease the lockdown

  • In the “Our plan to rebuild” document, the Government urges workers to return to work
  • Primary schools, shops and sporting events likely to open on June 01
  • FTSE 100 moved higher during Johnson’s speech, but failed to sustain those gains later in the afternoon

FTSE 100 finished today’s session 0.06% in green after the buyers failed to sustain the morning gains. The UK PM Boris Johnson presented a multi-stage plan to loosen the lockdown measures and increase the economic and business activity. 

Fundamental analysis: Conditional plan presented

Boris Johnson held a much-awaited speech today to present a “conditional plan” to reopen society and relax lockdown measures. Following his speech, the Government released a plan “Our plan to rebuild”, that outlines the progress the country has made in fighting the coronavirus (COVID-19) outbreak.

In order to boost the business activity, Johnson urged workers to return to work if they cannot work from home, with the Government hoping that workers in construction and manufacturing industries return as soon as possible. 

As of Wednesday, the residents can spend unlimited amounts of time outdoors while shops and sporting events will remain closed until June 01. Primary schools will partially reopen on June 01, the PM said. 

Johnson’s speech received a public backlash, with critics calling the much-awaited announcement as “vague”.

“Boris Johnson unveiled an unclear, and arguably irresponsible, set of measures on Sunday evening. This while allowing people to sit two metres apart from strangers in a park without giving any word on when they can see loved ones in different households,” Spreadex financial analyst Connor Campbell said.

Other analysts are calling for caution due to the risk of a second wave of infections as lockdowns ease.

“Investors are likely to stay cautious in the days and weeks to come, with the fear of a second wave ever present. In addition, a lot of the bullish drivers are already priced into markets. Some traders [are] wondering if there is still room for an extended rally this week,” said Activ Trades analyst Pierre Veyret.

Technical analysis: Optimism quickly fades

The buyers pushed the FTSE 100 higher during Johnson’s speech earlier this morning, however that optimism quickly faded as the next hourly session was used to erase those gains. 

FTSE 100 hourly chart (TradingView)

A move lower pushed the price action outside of the ascending channel, which is likely to invite more selling pressure tomorrow. The FTSE 100 is now more exposed to the pull back to 5,800 after it failed to keep its head above 6,000.

Summary

FTSE 100 closed the day barely in the positive territory despite the earlier gains as the PM Johnson unveiled a multi-stage plan to relax lockdown measures. 

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.