Where we are: The FTSE 100 is trading flat around 8,420 in early London trading, contained within a narrow 20-point overnight range. This is slightly below Friday’s New York close of 8,430, with initial support around 8,400 and resistance at 8,450.
What’s driving it: The UK domestic picture is mixed. While the Bank of England is exploring tokenisation in wholesale markets and cost-reducing ring-fence changes, the macro backdrop continues to show sticky inflation, with March CPI at 3.3% YoY. Despite this, the unemployment rate saw a positive surprise, dropping to 4.9% in January. Rising oil prices are providing a boost to energy heavyweights like BP and Shell, lending some support to the index, but broader market sentiment remains cautious. The upward move in US real yields is adding to headwinds for risk assets.
- The Bank of England’s focus on tokenisation signals a forward-looking approach to financial market infrastructure.
- Falling UK unemployment provides a glimmer of hope amidst inflationary pressures.
- Relatively high WTI crude (above $100) and resulting oil-sector gains, are masking deeper weakness in the index.
NY session focus: All eyes will be on the US data releases this morning, although no high-impact prints are scheduled before the NY open. Traders will be watching US Treasury yields and the dollar index for broader risk sentiment cues; a break above 118.10 in the DXY could trigger further FTSE downside. Key levels to watch are 8,400 for support and 8,450 for resistance. The trade that’s working is still long energy names, but this is increasingly vulnerable to a broader risk-off move. The pain trade for the FTSE 100 is a surprise dovish shift in US monetary policy expectations sending yields lower and risk appetite soaring.