Burberry Leads Optimism While UK Confidence Hits a Low:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.30% on 24 January 2025. Basic Materials & Real Estate sector has witnessed a substantial growth. Moreover, Energy, Utilities & Consumer Cyclicals sector has faced a major decline. 

Macro Update:  Burberry reported a smaller-than-expected 4% decline in quarterly comparable store sales, driven by a strong holiday season in the U.S., signaling progress in its turnaround efforts. The positive results boosted Burberry’s shares by 16%, with broader optimism reflected in gains for luxury peers like Kering (+10%) and LVMH (+3%), highlighting a potential rebound in luxury shoppers’ confidence. However, contrasting this positive trend, British consumer confidence plummeted in January to -22, its lowest level in over a year, marking the steepest drop since 2011, as concerns over the economy deepened. Finance Minister Rachel Reeves announced plans to review fiscal rules in March, emphasizing the importance of awaiting the Office of Budget Responsibility's forecast before making adjustments. Additionally, Barclays proposed revamping its executive compensation, offering higher performance-linked bonuses for its CEO and finance director, capped at £14 million, compared to £9.9 million in 2023, aligning incentives with performance targets. 

Top Market Movers: Among top gainers on FTSE 100 index, Antofagasta PLC (LSE: ANTO) witnessed a rise of 3.47% followed by JD Sports Fashion PLC (LSE: JD.) which gained around 2.84%. 

Commodity Update: On Friday, the yen dominated currency markets ahead of the Bank of Japan's (BOJ) anticipated interest rate hike, with a 25-basis-point increase widely expected. The U.S. dollar was set for its worst week in two months. In commodities, gold rose 0.34% to $2,775.50, silver gained 1.35% to $31.26, and copper increased by 0.42% to $9,282.50. However, Brent crude experienced a slight drop of 0.50%, settling at $77.95, following pressure from U.S. President Donald Trump on OPEC and Saudi Arabia to reduce prices and boost oil production. The BOJ's policy decision remains a key focus. 

Our Stance: Global shares rose on Friday, driven by optimism over a softer U.S. stance on China tariffs and expectations of lower interest rates following President Trump's comments. The Bank of Japan (BOJ) raised interest rates by 25 basis points, marking the highest level since the 2008 financial crisis, and upgraded inflation forecasts, boosting the yen while the dollar slipped to a one-month low. Oil prices remained steady but headed for a weekly decline as Trump demanded OPEC reduce crude prices while announcing a broad plan to increase U.S. production. The S&P 500 hit a record closing high as investors evaluated mixed corporate earnings and Trump's remarks at the World Economic Forum in Davos, where he warned global business leaders about tariffs on goods manufactured outside the U.S., underscoring the administration's protectionist stance. This mix of monetary policy shifts and trade signals has kept markets in a cautiously optimistic mode. 

FTSE 100 

The FTSE 100 closed at 8,565.20 on Thursday, up by 0.20%, forming a bullish candlestick pattern. However, the overall bullish trend remains intact, as the index stays above its 21-period Simple Moving Average (SMA), suggesting potential short-term gains. The 50-period SMA offers additional support, strengthening the likelihood of continued upward movement. The Relative Strength Index (RSI) is at 72.03, indicating sustained bullish momentum. With these technical indicators, the FTSE 100 is likely to maintain its upward trajectory if key support levels hold, reinforcing a positive near-term outlook. On the weekly chart, the FTSE 100 rose 3.11%, closing at 8,505.22, above the 50-period SMA at 8,148.56. Key support is at 7,932, with resistance at 8,400. Breaking the 8,400 resistance signals stronger bullish momentum, potentially targeting the next resistance at 8,700. A drop below 8,020 could signal further downside. Monitoring these levels will be crucial for predicting future price movements. 

Data Source - Refinitiv