Where we are: The FTSE 100 is currently trading at 22425, down 117 points or 0.52% on the day. Intraday, the index has ranged between 22424 and 22580. This puts it below yesterday’s New York close and suggests continued weakness after HSBC earnings disappointment. The index is approaching a key support level around 22000, a break of which could signal further downside.
What’s driving it: UK inflation data remains sticky, with March CPI at 3.3% and CPIH at 3.4%, exceeding previous readings and fueling concerns of further Bank of England rate hikes. This inflationary pressure is also reflected in the UK 2Y yield at 4.553% and the 10Y Gilt at 5.090%, both up 4-5bp on the day, steepening the 2s10s curve to +54bp. The stronger-than-expected inflation print diminishes hopes for imminent rate cuts, weighing on equities.
- UK March CPI rose to 3.3% YoY, above the previous 3% reading, indicating persistent inflation.
- UK 2Y gilt yields have risen 4bp to 4.553%, reflecting increased expectations for BoE rate hikes.
- EQT’s increased takeover offer for Intertek highlights potential value unlocking within the FTSE 100, yet the broader market selloff overshadows stock-specific positive news.
NY session focus: Watch for spillover from US equity futures, currently trading positively, with the S&P 500 futures up 0.45%. Focus will be on how US yields react and whether the DXY’s strength persists, currently at 98.26. Keep an eye on the 10Y Treasury yield, currently at 4.422%, as any sharp move could influence global risk sentiment. Key levels to watch on the FTSE are 22400 as immediate support and 22500 as resistance. The pain trade would be a strong rally in US equities dragging the FTSE higher despite the challenging domestic backdrop.