Where we are: The FTSE 100 is trading around 8,420, up slightly on the session. It has traded in a relatively narrow range overnight, generally tracking European sentiment, and is holding above yesterday’s New York close. Immediate resistance is around 8,450, with support around 8,380.
What’s driving it: The UK economy grew by 0.6% in Q1, significantly exceeding the 0.1% previously recorded and consensus forecasts of 0.1%. March also surprised to the upside with growth of 0.3% versus forecasts for a 0.1% contraction. However, inflation remains a concern, as evidenced by recent CPI prints, potentially limiting the extent of any sustained rally despite the GDP upside. Firmer US Treasury yields, with the 10-year at 4.46%, are providing a mixed influence, as they attract capital but also reflect a hawkish Fed backdrop.
- UK GDP m/m printed at 0.3% versus -0.1% forecast, signaling a stronger-than-expected economic rebound.
- UK Unemployment Rate unexpectedly dropped to 4.9%, suggesting a resilient labor market that could maintain wage pressure.
- Several FTSE 100 heavyweights trading ex-dividend today, partially offsetting the positive GDP news, creating a mixed technical picture.
NY session focus: All eyes will be on how US equities react to the ongoing data flow. Watch for reaction to the 08:30 ET US PPI number. Key levels to watch on the FTSE are 8,380 as initial support and 8,450 as immediate resistance. The ongoing trade is to be long exporters with USD revenue, though a resurgence in risk aversion could threaten this. The pain trade is a sharp move lower driven by a dovish repricing in Fed expectations.