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BG Group Deal Gives A Boost To FTSE 100

ByThierry Laduguie
Published 08/04/2015, 07:38

The BTI turned up on 1 April and is still rising and now the 34-day BTI has now turned up to confirm the BTI. Sentiment is bullish and in this situation odds favour a stock market rally. As expected the FTSE jumped after the Bank holiday weekend, on speculation that the Fed will not rush to hike rates after the weak nonfarm payrolls.

Helping the market was news that FedEx (NYSE:FDX) is seeking to buy TNT Express (AMS:TNTE) for $4.8 billion. M&A activity is positive for the market and today we have more M&A news, Royal Dutch Shell (LONDON:RDSa) is to announce a takeover of BG Group (LONDON:BG) for £45 billion. This deal would create the biggest company in the FTSE 100, so today the FTSE will be supported by the news and downside is limited.

Today we could see some volatility if we see some sharp moves in BG Group or Royal Dutch Shell. It looks like the FTSE will open lower but the real action will start after 8am when BG and Royal Dutch Shell will open. Right now it’s impossible to say where the index will be trading, if the decline extends the index is a buy.

The trend is up, sentiment is bullish and M&A activity is positive so I don’t expect a large pullback. Yesterday’s rally is part of wave (iii) inside wave c (circle). There are two possibilities, either wave (iii) is over and what we are seeing now is wave (iv) or wave (iii) will end near 7000 then the FTSE will pullback to complete wave (iv). Why wave (iv) is important? Because it will provide an entry level for the rally to 7100. Once wave (iv) is done the next move will be wave (v) of c (circle) up.

FTSE 100: 90 min chart

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