Where we are: The FTSE 100 currently trades around 8395, building on yesterday’s gains and extending its outperformance relative to European peers. The index is attempting to break above the 8400 level, which has acted as resistance recently. The overnight range has been relatively tight, but the bias is clearly to the upside following the Intertek takeover news. Yesterday’s NY close was near 8350.
What’s driving it: Positive sentiment surrounds the FTSE 100, primarily driven by the Intertek takeover bid, which suggests underlying value is being unlocked in the UK market. Although CPI figures were released in March (3.3% YoY), they are stale and are unlikely to be front of mind today. The better-than-expected unemployment rate data from January continues to support a positive, if backward-looking, view of the UK economy.
- Intertek’s £10.6bn takeover bid by Swedish firm EQT is injecting fresh capital into the index.
- The banking sector’s rebound from earlier tax-change fears is adding to the positive momentum, with HSBC, Lloyds, Barclays, NatWest and Standard Chartered all posting gains.
- Commodity strength is underpinning the resource-heavy FTSE, as copper, aluminium, nickel, and iron ore prices climb, benefiting miners like Rio Tinto and Anglo American.
NY session focus: US traders will be assessing whether the FTSE’s strength is sustainable or merely a short squeeze driven by takeover activity. Watch for any spillover from US yields (currently the 10Y at 4.42% and rising). The takeover premium for Intertek should keep a floor under the index. Key levels to watch are 8400 as immediate resistance, and 8350 as initial support. The trade that’s working is long the FTSE on dips, while the trade at risk is shorting UK equities against stronger global macro. The pain trade would be a sharp reversal driven by risk-off sentiment triggered by a surprisingly hawkish Fed minutes release later today.