FTSE Opens Week with a Rally – Hopes for Cuts in Government Spending

The London stock market looks set to print green for a third consecutive day as the market awaits a speech from the chancellor outlining cut

Written by: Gino Bruno D'Alessio • Monday, July 29, 2024 • 2 min read

• Last updated: Monday, July 29, 2024

ftse trade higher on BoE hopes, budget

The London stock market looks set to print green for a third consecutive day as the market awaits a speech from the chancellor outlining cuts in spending.

The FTSE is up 0.66% this morning, chancellor Rachel Reeves is expected to lay out plans for cuts in government spending in various projects. UK gilt yields are lower as investors bid up government bonds.

The higher bond prices are due to the expectation the UK government will issue fewer bonds if they carry out with their spending plans. The lower gilt yields have given stocks an extra appeal.

Today’s bullish open coms on the back of a rally on Friday in the U.S. and Asia. The NAS100 gained 1% and the NIKKEI225 gained 1.29%, returns which halted a 3-day decline for both indices.

Later this week we get the scheduled monetary policy committee meeting of the BoE. The market is generally expecting the central bank to keep rates on hold. Although there is growing consensus that the vote on August 1 will be a very close call.

At the previous meeting, 2 of the committee members voted for a cut. This time around if the perception that it’s going to be a close call is true, we would need to see 4 votes in favor or a cut, or at least 3.

We will need at least 3 votes in favor of a cut to keep the bullish momentum the market is experiencing in the hope rate cuts will start sooner rather than later.

Technical View

The day chart for the FTSE below shows a bullish momentum back in place. The market is above the Ichimoku cloud again. However, to get confirmation that the market is in full bull trend, we would need a close above the all-time high of 8,481 (orange line).

ftse higher,finds resistence at previous high

For today, the market is finding resistance on the previous high of 8,366 (red line). Failure to break that level could lead to a retracement. The market would find initial support at 8,278 (blue line).

Should the market break that support level, the next support would be at the bottom of the cloud.

FTSE

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ABOUT THE AUTHOR See More

Gino Bruno D'Alessio

Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.