7th May 2021. 7.06am
Morning Report – Friday 7th May
FTSE to open at 7,103 (+27 pts)
UK stocks hit 14-month highs yesterday as the Bank of England upgraded its growth forecast.
The central bank now expects the UK economy to grow 7.25% this year, up from a previous forecast of 5% made three months ago and the highest rate in more than 70 years.
There is now a very present risk that the bank will overshoot it’s 2% inflation target this year. With this in mind, that banks Monetary Policy Committee said the pace of continuing bond purchases “could now be slowed somewhat”.
Traders on both sides of the Atlantic chose to focus on the positive economic forecast and the FTSE closed at its highest level since February 2020, and the S&P is back within touching distance of all-time-highs.
|S&P 500||+0.82%||Bullish for UK stocks|
|Hang Seng||+0.21%||Neutral for UK stocks|
|Gold||+0.30%||Neutral for UK stocks|
|AUD/JPY||-0.04%||Neutral for UK stocks|
|US 10yr Yield||-0.34%||Neutral for UK stocks|
The FTSE broke and closed well above the April swing high resistance level we highlighted in yesterday’s Morning Report.
Prices have now pushed up into an area of potential resistance created the broken summer 2019 support area. Whilst you can’t see it on our chart below, it’s worth your while zooming out and looking left on your own FTSE chart.
Despite the potential resistance zone, momentum and trend are firmly bullish on the FTSE, and we’re likely to maintain a long bias to our trading portfolio.
|InterContinental Hotels (IHG)|
|UK Economic Announcements|
|(09:30) PMI Construction|
|International Economic Announcements|
|(07:00) Balance of Trade (GER)|
|(07:00) Industrial Production (GER)|
|(07:00) Current Account (GER)|
|(13:30) Unemployment Rate (US)|
|(13:30) Nonfarm Payrolls (US)|
|(15:00) Wholesales Inventories (US)|
|(20:00) Consumer Credit (US)|
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This research is prepared for general information only and should not be construed as any form of investment advice.