Global Market Volatility - UK Faces Economic Adjustments as Germany Boosts Defence, Infrastructure:

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Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.39% on 05 March 2025.  

Macro Update:  British Defence Minister John Healey will meet U.S. Defence Secretary Pete Hegseth in Washington on Thursday to discuss a peace plan for Ukraine, amid efforts by European leaders to present a peace plan to Washington following U.S. President Donald Trump’s decision to pause military aid to Ukraine. Meanwhile, UK Finance Minister Rachel Reeves plans billions of pounds in welfare cuts due to economic challenges, with proposals to be presented to the official forecaster ahead of her Spring statement on March 26. Bond yields in the UK rose as global markets reacted to new trade tariffs imposed by Trump, including 25% tariffs on imports from Canada, Mexico, and China, with more tariffs expected in April. Additionally, the UK government has introduced amendments to its Employment Rights Bill, ensuring all workers, including agency staff, receive contracts reflecting their regular working hours, marking a significant update to workers' rights. 

Top Market Movers: Among top gainers on FTSE 100 index, Games Workshop Group PLC (LSE: GAW) witnessed a rise of 6.11% followed by Mondi PLC (LSE: MNDI) which gained around 6.02%. 

Commodity Update: The U.S. dollar dropped to a three-month low against major currencies. At the same time, Asian shares showed mixed results after new U.S. tariffs prompted countermeasures from China and Canada, raising fears of an escalating trade war. In commodities, gold fell 0.13% to $2,917.80, silver rose 0.28% to $32.47, and copper increased by 0.20% to $9,384.80. Brent crude oil declined 0.20% to $70.93 amid concerns over global trade tensions and rising oil production. Oil prices hit a five-month low on Tuesday, with OPEC+ confirming plans to boost output from April amid ongoing economic uncertainties modestly. 

Our Stance: Germany's new government, led by a coalition of conservatives and the Social Democrats (SPD), has agreed to relax the country's strict "debt brake" to allow for increased defense spending and the creation of a €500 billion infrastructure fund. This shift aims to bolster Germany's military capabilities and stimulate economic growth through large-scale infrastructure investments. In the U.S., President Trump has imposed new 25% tariffs on imports from Canada and Mexico, alongside increased duties on Chinese goods. This move, which is likely to escalate trade tensions further, has already led to retaliatory measures from China and Canada. With Trump vowing additional tariffs in the coming months, these actions are expected to increase global market volatility and inflationary pressures. The combination of fiscal policy changes and trade wars could slow down global economic growth, while raising prices for consumers, particularly in the U.S. where inflationary concerns remain high. 

FTSE 100 

The FTSE 100 closed at 8,759.00 on tuesday and showed a loss of 1.27%, forming a bearish candlestick pattern, the index remain and maintain a positive market sentiment. It closed near the 21-period Simple Moving Average (SMA), indicating a favourable short-term outlook. The 50-period SMA serves as a strong support level, suggesting the potential for continued upward momentum. The Relative Strength Index (RSI) stands at 57.46, reflecting healthy bullish strength without entering overbought territory, which suggests room for further gains. These technical signals indicate a positive trend, making the FTSE 100 an attractive option for short-term investors. 

Data Source - Refinitiv