Can the FTSE100 Return to Scoring New Highs?

After a difficult start to the week amid the Cabinet reshuffle, the FTSE 100 has regained some upward momentum, but will it be dragged down by the September doldrums?

The Latest Developments

• The UK's FTSE 100 bounced back in the latter half of the week after a stronger-than-expected services PMI print.
• Russell announces an index rebalance, with Metlin and Burberry joining the blue-chip index.
• Burberry makes a notable recovery, returning to the FTSE 100 after a year's absence amid a turnaround that has seen its share price rise 95% since the new CEO took over.

Some Relief for the Chancellor

, with the FTSE 100 rising 1.1% after the two foremost economic leaders gave comments that apparently reassured the market. Chancellor Rachel Reeves set November 26 as the date for the much-anticipated Autumn Budget and tried to dismiss concerns about raising taxes again. BOE Governor Andrew Bailey talked down concerns around the rise in long-term gilt rates, which hit an almost 30-year high at the start of the week.

Meanwhile, the UK Services PMI rose in August to 54.2 from 51.8 and exceeded the flash 53.6 reading, suggesting the services economy was stronger than expected. This supported the UK’s premier index. The outperformers continued to be in the mining space, thanks to gold hitting a new record high. Fresnillo was once again leading the index higher, along with Antofagasta.

, with Metlin joining the blue chip index, along with Burberry coming back after being off the list for a year. They will take the place of Taylor Wimpey and Unite Group, which will move from the FTSE 100 to the FTSE 250. The change will take effect on September 22.

Burberry: Can a Remarkable Turnaround Continue?

The British luxury firm is coming back to the top listing in the FTSE after being demoted a year ago amid a slump in its market value. However, since CEO Joshua Schulman took the helm of the company,, reflecting resurgent investor confidence in the brand. Analysts had blamed the company's decline on a series of strategic missteps and a broader downturn in global luxury spending. In its latest report, the company still saw a loss but has managed to generate positive growth in same-store sales, while management expressed confidence in achieving its goal of £80 million in cost cuts. Analysts are crediting the turnaround to Burberry's new chief executive as well as its latest product and marketing strategy.

In its new strategy, the company has reversed its move into leather goods, which are dominated by long-established rivals, and instead turned its focus back to items like trench coats. CEO Schulman said that Burberry is still in the early stages of its turnaround. Analysts suggest that the company's renewed focus on outerwear could help it recover its market position, but it still has issues to address and needs to get back into the black.

FTSE 100 Rebounds as Investor Sentiment Improves

Despite two consecutive gains in the UK blue-chip index, the RSI hasn't hit overbought territory, suggesting there could be further upside to the move. Resistance can be found at the prior all-time high at 9340, with a breakout heading to the round 10000 level. If the rebound falters, the previous swing low offers support at 9120, which coincides with the lower Bollinger Band, followed by the round 9000 handle.

Source: SpreadEx | UK 100, Daily