FTSE 100 Commentary - Friday, April 12

FTSE Pushing On

The FTSE has broken out to fresh record highs this week as the index continues to find strong demand. The current rally is being fuelled by a boom in mining shares as metals continue to see a strong rally across the board. Oil stocks have been among the big winners with both Shell and BP seeing big gains this week. Copper prices have also risen to near 15-month highs which has pushed mining names higher too.

 

GDP Stays Positive

On the UK data front, GDP was seen coming in above forecasts again last month, marking the second consecutively monthly gain. The data is helping boost investor sentiment in the UK with traders sensing diminished recession risks in line with current activity. Indeed, the rally in the FTSE comes despite the BOE this week hinting that initial rate cut projections for the year are now outdated.

 

BOE Easing Pushback

Speaking yesterday, BOE’s Rachel Greene cautioned against early BOE rate cuts and said that traders should push back their expectations until later in the year. Market pricing for BOE rate cuts has shifted in recent weeks with the market now expecting just two cuts, down from 3 initially, in line with improving economic data. Looking ahead today, traders will be waiting on the latest NIESR GDP estimate. If we see an upward revision from the last figure, this should help keep UK asset prices supported near-term.

 

Technical Views

 

FTSE

The rally in the FTSE has seen the index testing above the 8023.5 level once again. This remains the key upside barrier currently with a break above here opening the path to new highs. Momentum studies showing some bearish divergence, warning of potential reversal risks. Outlook remains bullish while price holds above 7811. 

(Click on image to enlarge)

 


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