UK FTSE 100 Futures Index Sticks To BoE-Inspired Gains And Rises To A Fresh 10-Year High, UK Quarter-One GDP Report Eyed
Key Takeaways:
- The UK FTSE 100 futures index rises to a fresh 10-year high of £8420.51 On Friday, during the Asian session
- Bank of England held its bank rate steady at 5.25% during its May meeting but signalled summer cuts
- Anglo American Plc. (London: AAL) and 3i Group, Plc. (London: III) led the list of top gainers and top losers, respectively, before the bell
- Markets now eye the UK's GDP quarter-one data report for directional impetus
The UK FTSE 100 Futures index rose slightly higher on Friday during the Tokyo session, supported by strength in stocks in the material and consumer staples sectors. Investors continued to assess the Bank of England's (BoE) latest interest rate hike.
As per press time, the exporter-heavy FTSE 100 futures index rose 0.14%/12.1 points to trade at the £8420.51 level and record a fresh 10-year high. The current price movement follows after-hours trading gains that saw the primary index recoup its earlier losses and close with heavy gains above the £8400.00 mark in what was a winning day across European markets. Stocks rallied following the Bank of England's latest interest rate decision.
After its two-day monetary policy meeting, the Bank of England's Monetary Policy Committee voted by a majority of 7–2 to maintain the Bank Rate at a 16-year high of 5.25%, in line with market expectations. However, two committee members preferred to reduce the rate by 0.25 bps to 5%, compared to only one member in the previous meeting, and officials revised the inflation forecast while boosting the growth outlook. The Committee's updated projections foresee a decline in Bank Rate from 5.25% to 3.75% by the end of the forecast period compared with an endpoint of 3.25% in February. Despite this, the Committee reassured that the monetary policy will remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, which aligns with the MPC's remit.
Noteworthy, Thursday's decision was widely expected, following last month's softer UK inflation report, which, despite showing softer headline and core inflation prints, both prints remained well above the BoE's 2% target. Additionally, in the latest jobs report, despite showing an increased unemployment rate in the UK, the number of full-time workers increased during the quarter, as did the number of people employed with second jobs, accounting for 3.6% of all employed individuals.
Following the bank's announcement, the Great British Pound (GBP) rose by as much as 0.23%/28.5 pips against the buck before paring losses and moving higher to close above the $1.25000 mark. On the other hand, the primary index rose modestly following the announcement, reversing Asian session losses and lifting the index to close above the £8400.00 mark and post one of its best daily gains so far (75.8 points) this year.
On the economic data front, The S&P Global UK Construction PMI rose to 53.0 in April 2024, up from 50.2 in March. This marks the second consecutive month of positive growth and the most robust expansion since February 2023, mainly driven by solid commercial and civil engineering growth. The outlook for the near future remains optimistic, with new work seeing a third consecutive month of increase, supported by a boost in sales due to an improving domestic economy.
UK FTSE 100 Index Movers
Here are the top FTSE 100 UK index movers today before the bell, a week in which the main index is set to close with heavy gains.
Top Gainers
- Anglo American Plc. (London: AAL) rose 3.09%/82.0 points to trade at £2736.00 per share.
- JD Sports Fashion, PLc. (London: JD) gained 2.91%/3.40 points to trade at £120.20 per share.
- Ocado Group, Plc. (London: OCDO) added 2.28%/7.90 points to trade at £353.80 per share.
Top Losers
- 3i Group, Plc. (London: III) lost 5.18%/154.00 points to trade at £2820.00 per share.
- HSBC Holdings, Plc. (London: HSBA) declined 1.86%/13.10 points to trade at £690.90 per share.
- Melrose Industries, Plc. (London: MRON) shed 1.62%/9.80 points to trade at £595.60 per share.
As we advance, investors now look forward to the release of the UK's quarter-one GDP report, which, depending on the actual data, will affect the UK gilt yields and the Great British Pound's price dynamics and, in turn, have a direct impact on the strength of the UK FTSE 100 index.
Technical Outlook: UK100 Index One-Day Price Chart
The UK's FTSE 100 Index daily chart shows the primary index's impressive performance over the last 129 days, rising step by step to notch a 10-year high of £8420.51 earlier today during the Asian session. The next level of focus is now the £8500.00 round mark; however, the RSI(14) technical oscillator on the daily chart is flashing extreme overbought conditions, warranting caution to traders against submitting aggressive bullish bets around the index and waiting for near-term corrective moves before placing further bullish bets around the index.
On the downside, the £8321.43 level (S1) now seems to protect the downside for the primary index. On further weakness, the focus shifts lower toward the key resistance level, now turned to the support level of the multi-week ascending channel pattern extending from the late-January 2024 swing to higher highs. A clean break below this level will pave the way for an accelerated drop toward the £8192.09 level (S2). If the price manages to breach this level, this would catapult a move toward the $8000.00 psychological mark, which would mark a 4.94% daily loss.
