Global Markets Tumble as Trump’s Tariff Threats and Fed Caution Fuel Risk Aversion:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.34% on 20 February 2025.  

Macro Update:  Anglo American reported a $3.1 billion loss, primarily due to a De Beers diamond unit write down, and announced a dividend cut while making progress on asset sales and debt reduction as part of its strategic restructuring to focus on copper. The company is spinning off platinum and diamond units and selling coal and nickel assets following BHP’s failed takeover attempt. In the UK, investors revised down their expectations for interest rate cuts by the Bank of England after stronger-than-expected inflation and wage growth data, now pricing just over two quarter-point cuts by December, compared to earlier projections of more than 60 basis points in reductions. On the geopolitical front, the Kremlin strongly opposed British Prime Minister Keir Starmer’s suggestion of deploying UK troops to Ukraine as part of a potential peacekeeping mission, warning that such a move would be unacceptable for Russia and expressing concern over Britain’s stance on the conflict. 

Top Market Movers: Among top gainers on FTSE 100 index, Centrica PLC (LSE: CNA’) witnessed a rise of 7.06% followed by Lloyds Banking Group PLC (LSE: LLOY) which gained around 6.12%. 

Commodity Update: The yen strengthened while the U.S. dollar remained steady as investors digested U.S. President Donald Trump's latest tariff proposals and their potential global economic impact. This also raised questions about future interest rate decisions by major central banks. Geopolitical tensions rose as Trump labelled Ukrainian President Volodymyr Zelenskyy a "dictator" amid ongoing peace talks between Russia and Ukraine. In commodities, gold rose 0.65% to $2955.80, silver gained 0.56% to $33.23, and copper increased 0.48% to $9490.00. Meanwhile, Brent oil dropped 0.30% to $75.83, weighed down by an unexpected rise in U.S. crude oil inventories. 

Our Stance: Recent developments in global markets reflect heightened investor caution due to escalating trade tensions and geopolitical uncertainties. U.S. President Donald Trump's announcement of impending tariffs on imports such as automobiles, semiconductors, pharmaceuticals, lumber, and forest products has prompted a retreat from riskier assets, leading to a dip in U.S. stock index futures. Despite these challenges, European markets have shown resilience, with indices edging higher due to positive corporate earnings, even as key sectors like energy and healthcare experience declines. The Federal Reserve's prudent stance reflects a recognition of these complexities, opting for a wait-and-see approach in monetary policy. Investors should remain vigilant, as the evolving geopolitical landscape and policy decisions are likely to continue influencing market dynamics in the near term. 

FTSE 100 

The FTSE 100 finished at 8,712.53 on Wednesday, a loss of 0.62%, 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 59.74, 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