FTSE FInding Its Feet As Bond Yields Buckle On Recession Woes

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The FTSE 100 increased by 0.5% and the FTSE 250 rose by 0.3% on Thursday. This was driven by a decrease in government bond yields following the latest economic data indicating that the UK economy is in recession. The data also suggested a potential need for the Bank of England to implement monetary policy easing. The economic data revealed that the UK economy entered a recession in the latter half of 2023, with a larger-than-expected 0.3% contraction in the last quarter of the year and a 0.1% decline between July and September.

The stock market also reacted positively to a decrease in the yield on 10-year UK gilts, which stood at 3.993% after the release of the economic data. This led to increased expectations of a potential interest rate cut from the Bank of England, with money markets now pricing in approximately 78 basis points of cuts for the year, up from around 70 basis points prior to the data release.The recent economic data followed a lower-than-expected domestic inflation report on Wednesday, which raised hopes for an early rate cut and resulted in higher stock index closures. 

On the positive side of the ledger, Centrica, the owner of British Gas, was leading the FTSE 100 after announcing a higher annual dividend. The company's shares are up 4.4%, making it one of the top gainers on London's blue chip index. Centrica has raised its 2023 dividend by 33% to 4p and its British Gas business recovered 500 million pounds in the first half of the year. The company's full-year adjusted operating profit exceeded consensus; the company's turnaround is nearly complete, with significant progress made over the past three years. The stock is up approximately 46% in 2023.

On the negative side of the ledger Imperial Brands, traded at the bottom of the FTSE, the experienced drop in their stock price was attributed to the fact they traded without the right to receive the dividend.Relx stock reached a record high after a strong 2024 forecast, with a 2% increase before staging a sharp reversal to trade towards the bottom of the table. The company expects strong underlying growth in revenue and adjusted operating profit in 2024. In 2023, they reported a 13% growth in adjusted operating profit to 3.03 billion pounds ($3.80 billion) and raised their dividend by 8% to 58.8p. The exhibitions business saw a significant increase in face-to-face activity, which contributed to the company's success. The stock was up approximately 36% in 2023.

FTSE Bias: Bullish Above Bearish below 7650

  • Above7710 opens 7825
  • Primary resistance at7708
  • Primary objective 7343
  • 5 Day VWAP bearish
  • 20 Day VWAP bearsih

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