Where we are: The FTSE 100 is currently trading around 10,475, down from its overnight high of 10,490. It’s holding above its intraday low near 10,460, but the index is under pressure as it struggles to maintain the gains seen earlier in the week. The current level is below yesterday’s New York close, suggesting a weaker tone heading into the US session.
What’s driving it: This morning’s weaker-than-expected UK Retail Sales print is weighing on the FTSE. The -1.3% m/m figure, significantly below the -0.6% forecast, has triggered a reassessment of the UK’s economic outlook and tempered expectations for further Bank of England rate hikes. This disappointment overshadowed earlier data showing softer inflation and a slight improvement in consumer confidence, as traders scale back bets on BoE tightening amid signs of a slowing economy. While US Treasury yields have fallen, offering some support, the focus remains firmly on the domestic picture.
- UK Retail Sales m/m printed -1.3%, nearly double the forecasted -0.6% decline.
- The UK’s unemployment rate edged up to 5% in February, signaling a softening jobs market.
- Despite the recent pullback, the FTSE 100 remains at relatively high levels, suggesting some resilience, though it now looks vulnerable to further downside.
NY session focus: The US session will likely amplify or counter the current negative sentiment. Key levels to watch on the downside are 10,450 and then 10,400, while resistance sits at 10,500. Any further downside surprises from US data or hawkish commentary from Fed officials could intensify the pressure. The trade that’s working is shorting FTSE on bounces, while the trade at risk is chasing the recent rally. The pain trade for the FTSE 100 would be a strong rebound in US sentiment coupled with a surprise improvement in UK economic data, forcing shorts to cover.