FTSE Enters Bear Trend on Trump Tariffs and Domestic Concerns
UK stocks experience largest 2-day slide since Covid epidemic, could be ready for a correction.
- FTSE loses 8.65% in 2 sessions
- UK will not relax fiscal rules
- Reeves budget weighs on employer costs
The FTSE opened higher today by 0.57% after losing 8.65% in the previous two sessions. At one point yesterday, the FTSE index was trading down 5.7% on the day, for a total loss of 11.2% over two days.
Government Spending and Reeves’ Budget
Reeves’ budget, which introduced higher employment costs, more taxes, and strict spending rules has played a large role in the FTSE’s week performance in March.
While the effects of the budget still linger, the newly imposed retaliatory US tariffs have sent a reverberating shock to the stock market.
Pundits are calling for PM Starmer to loosen spending rules, which he could do by declaring an economic shock.
However, the prime minister has stated that the spending rules, aimed at balancing the budget by 2029/30, are in place to create stability.
During a meeting at a Jaguar Land Rover factory, he stated that “the first thing to do is not put aside our fiscal rules, but to remind people why we put them there in the first place.”
FTSE Live Chart
FTSE Day Chart Enters Bear Trend
The day chart below for the FTSE shows a market in a clear bear trend. Price is below the Ichimoku cloud, and the Lagging line (yellow line) has followed down below the cloud in confirmation.
The 2-day drop, between Friday and Monday, is the worst 2-session decline since the Pandemic in 2020.
Also worthy of note, is yesterday’s candle broke below a very strong support level of 7,994 (red line). This level was tested 3 times in 2024 and recovered each time.
Yesterday’s close was on the support level of a previous dip from April 2024 at 7.753 (yellow line).
With the RSI dipping down to 14, showing how high the momentum is to the downside, there may be room for a correction from here.
The next resistance is at 7,910 (gray line), with the major resistance at 7,994 (redline).
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