Economic Uncertainty Deepens as UK Faces Fiscal Strain and Markets React to Global Instability:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.18% on 19 March 2025.  

Macro Update:  British employers' pay increases have aligned with inflation for the first time since October 2023, holding steady at 3% amid concerns over upcoming payroll tax hikes. Meanwhile, Prime Minister Keir Starmer reaffirmed Britain's support for Ukraine in a discussion with President Zelenskiy about ceasefire progress led by U.S. President Trump. The Labour government announced plans to cut over £5 billion from the welfare budget by 2029/30 to manage rising costs, setting the stage for tough fiscal decisions ahead. Mining giant Rio Tinto defended its dual-listed structure against a proposal from hedge fund Palliser Capital, urging shareholders to vote against a review. In the utility sector, Thames Water is seeking £3 billion in new equity and has paused a proposed 53% hike in customer bills while working on recapitalization to avoid nationalization. 

Top Market Movers: Among top gainers on FTSE 100 index, M&G PLC (LSE: MNG) witnessed a rise of 2.13% followed by Games Workshop Group PLC (LSE: GAW) which gained around 1.76%. 

Commodity Update: The yen fluctuated between losses and gains on Wednesday after the Bank of Japan (BOJ) kept interest rates unchanged, as expected. Meanwhile, the dollar struggled to regain strength ahead of the Federal Reserve’s policy decision. In the commodities market, gold rose 0.06% to $3,042.50, after reaching an all-time high on Tuesday. Silver dropped 0.57% to $34.69, and copper fell 0.15% to $9,901.00. Brent crude declined 0.20% to $70.44 following an agreement between Russia and U.S. President Trump to halt attacks on each other's energy infrastructure temporarily, potentially allowing more Russian oil in global markets. 

Our Stance: Russian President Vladimir Putin agreed to U.S. President Donald Trump's proposal for a temporary halt to attacks on Ukrainian energy infrastructure, though he stopped short of committing to a full 30-day ceasefire. However, shortly after the announcement, Russian forces launched fresh attacks on Kyiv, raising doubts about Russia’s intentions. Oil prices declined as Brent crude fell 0.84% to $69.97 per barrel and WTI dropped 0.90% to $66.30, reflecting optimism that reduced hostilities could ease global supply constraints. Meanwhile, U.S. stocks fell as investors exercised caution ahead of the Federal Reserve’s policy decision, which is expected to keep interest rates unchanged. European markets also slipped, mirroring Wall Street’s decline. While the ceasefire agreement provides some hope for de-escalation, continued attacks and economic uncertainties keep markets on edge. 

FTSE 100 

The FTSE 100 is currently trading at 8,679.90, reflecting a modest loss of 0.29% on Wednesday and forming a bearish candlestick pattern. Despite this, the index remains positioned above both the 21-period and 50-period Simple Moving Averages (SMAs), which offer key support levels. This setup indicates the potential for further upward momentum in the near term. The index is holding above a crucial horizontal support level, suggesting a possible shift towards bullish sentiment after recent lows. The Relative Strength Index (RSI) stands at 52.31, signalling mild bullishness with potential for additional upside. While market uncertainty persists, short-term traders may find opportunities near support levels, with momentum shifts being pivotal in determining whether the recovery will continue or a decline will resume. The coming sessions will be crucial in confirming whether the bullish outlook can materialize or if a downward trend takes hold. 

Data Source - Refinitiv