Where we are: The FTSE 100 is currently trading at 22440, up 282 points or 1.27% on the day, testing the upper end of its intraday range of 22135-22468. The index is building on gains seen in the EU session, fuelled by broad risk-on sentiment. It is significantly above yesterday’s close, driven by a dovish hold from the Bank of England and supportive corporate news.
What’s driving it: The Bank of England’s decision to hold rates steady at 3.75% is the primary driver, with the market interpreting the MPC’s statement as dovish despite sticking to its vigilance on inflation. Gilt yields have fallen sharply, with the 2-year down 14bp to 4.449% and the 10-year down 9bp to 4.995%, boosting risk appetite and equity valuations. This dovish repricing is amplified by a general risk-on mood, with US futures firmly in the green and the DXY weakening, but the UK story is taking the lead.
- The BoE’s MPC Official Bank Rate Votes were 1-0-8, with only Huw Pill voting for a hike, reinforcing the dovish message.
- The 2s10s curve has steepened to +55bp, reflecting expectations that the BoE is nearing the end of its hiking cycle.
- DCC’s rejection of a £5bn takeover bid from KKR and Energy Capital highlights underlying value in the FTSE 100, potentially attracting further M&A interest.
NY session focus: All eyes will be on the reaction in US markets as they digest the BoE’s decision and its impact on global risk sentiment. The S&P 500 futures are pointing to a positive open, currently up 0.65%. Key levels to watch on the FTSE are resistance at the intraday high of 22468 and support around 22300. Watch for 08:30 ET US data prints and Fed speak later in the day to shape the risk environment. The trade that’s working is long UK equities; the trade that’s at risk is short Gilts. The pain trade would be a hawkish repricing by the market driving yields higher and reversing equity gains.