The FTSE 100 was set to jump more than 1% at the opening of negotiations today, as Rishi Sunak improved its forecast for the UK’s economic recovery from Covid in this week’s budget.
Traders on IG are expecting the FTSE to jump by 67.5 points in early trading this morning, with nearly 84% of traders betting that it will rise further.
The optimism that starts the week comes with optimism that the successful progress of a vaccine launch in the UK will lead to a faster-than-expected recovery, requiring less tax increases than expected, according to the Financial Times.
The newspaper reported that the Independent Financial Responsibility Budget anticipates a faster-than-expected recovery, although this is largely due to the fact that the decline was also steeper than previously expected.
Previous OBR predictions were made ahead of the spike in Covid cases in December due to Kent’s mutation in the virus that required tough lockdowns.
However, market optimism was not only prevalent in the UK today. The expected rise in the FTSE Index was mainly attributed to strong gains in Asia and Australia, with the bond markets stabilizing after their yields rose significantly last week.
Japanese stocks are up nearly 2% this morning, with stock indices from Australia, China and Hong Kong advancing around 1%.
The 10-year Australian yield fell 0.27 percentage point to 1.628%, reflecting a calmer mood over the global interest rate outlook.
For weeks now, investors have feared that the global recovery from the Covid crisis could spur inflation, which means central banks will have to raise interest rates.
US Treasury yields remained strong this morning after falling from a 12-month high on Friday.
The US S&P 100 is expected to rise 0.8% when trading opens this afternoon, according to the futures markets.