BoE Cuts Rates Amid Growth Concerns; Global Markets Await U.S. Jobs Data:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.28% on 07 February 2025.  

Macro Update:  The Bank of England lowered interest rates to 4.5%, with some policymakers pushing for a larger cut to 4.25% to counter the ongoing economic slowdown. However, the central bank remains cautious about further reductions due to concerns over rising inflation and global economic uncertainty. The UK’s 2025 growth outlook was halved, a setback for Finance Minister Rachel Reeves as she seeks to boost economic momentum, while inflation is projected to nearly double the 2% target before stabilizing. Meanwhile, consumer confidence continues to decline, with rising inflation and energy costs straining household budgets, leading to reduced discretionary spending, particularly among lower-income shoppers. On a more positive note, house prices increased by 0.7% in January, the largest rise in nearly a year, as buyers rushed to complete purchases ahead of an upcoming property tax hike in April. 

Top Market Movers: Among top gainers on FTSE 100 index, Legal & General Group PLC (LSE: LGEN) witnessed a rise of 3.77% followed by Compass Group PLC (LSE: CPG) which gained around 1.61%. 

Commodity Update: The Japanese yen surged to a nine-week high as traders bet on potential interest rate hikes in Japan this year. Meanwhile, major currencies, including the U.S. dollar, remained steady ahead of the release of U.S. monthly payroll data. After a week of market volatility driven by U.S. tariff threats, the focus shifted to the jobs report, with investors also monitoring geopolitical developments and President Trump's policy moves. In commodities, gold rose 0.47% to $2,890.30, silver climbed 0.62% to $32.93, and copper gained 1.10% to $9,389.20. Brent oil futures stayed flat at $74.27 amid ongoing supply glut concerns. 

Our Stance: The S&P 500 and Nasdaq closed higher, while the Dow dipped as investors analyzed earnings and awaited key U.S. jobs data. Amazon exceeded revenue expectations but reported slightly weaker cloud computing sales, leading to a 4% after-hours drop. Market focus now shifts to the upcoming U.S. nonfarm payrolls report, expected to show an increase of 170,000 jobs in January, following a strong December. Meanwhile, euro zone bond yields remained steady as investors assessed global economic conditions, with concerns about trade tensions and monetary policy adjustments. 

FTSE 100 

The FTSE 100 finished at 8,727.28 on Thursday, rising by 1.21%, and formed a bullish candlestick pattern, signalling positive market sentiment. The index remains above its 21-period Simple Moving Average (SMA), suggesting a favourable short-term outlook. Furthermore, the 50-period SMA provides solid support, reinforcing the potential for continued upward momentum. With the Relative Strength Index (RSI) at 70.77, the index shows healthy bullish strength without reaching overbought levels, indicating there is still room for further gains. These technical indicators indicate a positive trend, suggesting that the FTSE 100 is poised for further growth. As such, the index remains an appealing option for short-term investors seeking potential opportunities. On the weekly chart, the FTSE 100 gained 2.02%, closing at 8,673.96. The index remains well above the 50-period SMA at 8,186.40, with support at 8,277. Resistance is at 8,800, and a breakout above this level could push the index toward 8,900. However, a drop below 8,020 could signal downside risk. Investors should monitor these levels for insight into future price movements.. 

Data Source - Refinitiv