The FTSE 100 Index continued its recent rally this week, helped by the ongoing bank and mining stocks gains. It jumped to a high of £10,208 on Tuesday, up by 35% from its April 2025 lows, as focus now shifts to the UK and Chinese relationship and the upcoming Bank of England decision.
Keir Starmer’s trip to China
The FTSE 100 Index continued rising this week as Prime Minister Keir Starmer traveled to China to meet President Xi Jinping.
Starmer, like Canada’s Mark Carney, is aiming to reset the trade relationship with Beijing as concerns about the reliability of the United States remain.
Market participants are anticipating some agreements that may benefit companies in the FTSE 100 Index during this trip. For example, it is likely that Chinese companies will place orders for Rolls-Royce engines and other products.
The other main catalyst for the FTSE 100 Index will come out later on Wednesday when the Federal Reserve concludes its first monetary policy meeting of the year.
Economists are in agreement that the bank will leave interest rates unchanged between 3.50% and 3.75%. However, Jerome Powell’s press conference will have an impact on markets because it will be the first meeting since the grand jury subpoenas.
The FOMC decision comes a week before the Bank of England (BoE) delivers its first decision of the year. Economists expect the bank to leave interest rates unchanged after last week’s macro data.
The numbers showed that the country’s retail sales rose in December because of the Christmas season. Another report showed that the headline and core inflation remained steady above the BoE’s 2% in December last year. Therefore, the bank has no room to cut interest rates in this meeting.
The FTSE 100 Index will react to the upcoming Magnificent 7 earnings, which will come out later today when companies like Microsoft, Meta Platforms, and Tesla release their earnings. While these are American companies, they often have an impact on global equities.
Lloyds Bank, the most actively traded company in the FTSE 100 Index will publish its financial results on Thursday, providing color about the banking sector. Its results come as UK bank stocks rise, with HSBC becoming the first European bank to hit a $300 billion market cap.
More FTSE 100 Index companies will publish their financial results next week. The most notable ones will be GSK, Shell, Unilever, and Beazley. Beazley’s numbers will be important as they come as Zurich continue its £7 billion pursuit.
FTSE 100 Index technical analysis
The three-day timeframe chart shows that the FTSE 100 Index continued its strong rally this month and is now trading at its all-time high. It has jumped above the ultimate resistance level of the Murrey Math Lines tool at £10,000.
The index has jumped above the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) has jumped above the overbought level.
Therefore, the most likely scenario is where the FTSE 100 Index continues rising, with the next key target being the extreme overshoot at £10,625.
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