Global Markets Show Resilience Amid Bitcoin Surge, Defense Stock Rally, and Inflation Concerns:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.13% on 17 February 2025.  

Macro Update:  British Prime Minister Keir Starmer expressed readiness to deploy British troops to Ukraine as part of a postwar peacekeeping force, emphasizing the need for lasting peace to deter further Russian aggression. Meanwhile, investors support HSBC’s decision to scale down its investment banking operations in the Americas and Europe to focus on its core Asian markets. In Britain, business confidence has hit a five-year low as employers plan price hikes and job cuts in response to tax increases, with nine out of ten firms anticipating higher employment costs. Additionally, Indian authorities have ordered Aviva’s local unit to pay $7.5 million in back taxes and penalties for alleged tax fraud, a significant setback for the insurer given its competitive market position and modest annual profit of $10 million. 

Top Market Movers: Among top gainers on FTSE 100 index, Bae Systems PLC (LSE: BA.) witnessed a rise of 6.64% followed by NatWest Group PLC (LSE: NWG) which gained around 3.21%. 

Commodity Update: The Japanese yen strengthened on Monday, driven by positive GDP data, while the Australian and New Zealand dollars remained steady ahead of upcoming policy decisions. The U.S. dollar weakened as traders assessed disappointing economic data, fueling expectations for more Federal Reserve rate cuts this year. In commodities, gold rose 0.32% to $2910.42, silver dropped 0.17% to $32.79, and copper gained 0.29% to $9500.10. Brent oil fell 0.20% to $74.59, amid speculation that a potential Russia-Ukraine peace deal could ease sanctions and disrupt global supply. In contrast, global tariff tensions raised concerns over slowing economic growth and energy demand. 

Our Stance: Global markets reflect a mix of risk appetite and economic caution. Asset managers significantly increased exposure to U.S. Bitcoin ETFs in Q4 2024, capitalizing on a 47% surge in the cryptocurrency’s price, signaling growing institutional confidence in digital assets. Meanwhile, European stocks, particularly in the defense sector, rallied as political leaders push for increased military spending amid heightened concerns over the Ukraine war. The STOXX 600 index extended its winning streak, reflecting sustained investor optimism. In the U.S., the S&P 500 remained resilient, rising 1% for the week, despite stronger inflation data, which has tempered expectations of further interest rate cuts. The upcoming Walmart earnings report will be a key indicator of U.S. consumer health, as inflationary pressures and potential price hikes from Trump’s tariffs remain in focus. 

FTSE 100 

The FTSE 100 finished at 8,732.46 on Friday, a loss of 0.37%, despite a bearish candlestick pattern, the index remains in 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 64.11, 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 0.37%, closing at 8,732.46. The index remains well above the 50-period SMA at 8,227.28, with support at 8,206.78. Resistance is at 8,850, 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