Global Markets Waver Amid U.S. Economic Uncertainty, Tax Cuts Boost Optimism:

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Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.58% on 26 February 2025.  

Macro Update:  British Prime Minister Keir Starmer announced plans to increase defence spending to 2.5% of GDP by 2027, with a longer-term target of 3%, reinforcing Britain's commitment to European security ahead of his meeting with U.S. President Donald Trump. Meanwhile, the British Retail Consortium warned that 160,000 part-time retail jobs could be lost due to higher employer taxes and regulatory changes introduced by the Labour government to fund infrastructure and public services. BP shifted its focus back to fossil fuels, raising annual oil and gas investment to $10 billion, while the Climate Change Committee urged the UK to reduce fossil fuel dependence and adopt green energy solutions to meet its 2050 net zero target. In the energy sector, Ofgem invited bids worth £4 billion to develop electricity transmission links connecting Great Britain to North Sea power, aligning with efforts to expand renewable energy infrastructure. 

Top Market Movers: Among top gainers on FTSE 100 index, Convatec Group PLC (LSE: CTEC) witnessed a rise of 7.77% followed by Hiscox Limited (LSE: HSX) which gained around 3.94%. 

Commodity Update: The U.S. dollar weakened to an 11-week low against major currencies on Wednesday, pressured by declining short-term Treasury yields following weak economic data. The yen rose to its highest level since October as investor sentiment remained fragile amid fears of new tariffs from the Trump administration. The Canadian dollar hovered near a two-week low with additional tariffs set for next week. In commodity markets, gold surged 0.47% to $2,932.50, silver gained 0.97% to $32.13, and copper rose 0.70% to $9,472.50. Brent crude oil increased 0.40% to $73.29 after a report showed a drop in U.S. crude stockpiles. 

Our Stance: Global financial markets are reflecting a mixed sentiment as U.S. stocks struggled, with the S&P 500 and Nasdaq hitting one-month lows, weighed down by weak consumer confidence data and growing economic uncertainties. This risk-off sentiment has dominated the market, pushing investors towards safer assets like bonds. However, global shares rebounded after the Republican-controlled U.S. House passed President Trump’s $4.5 trillion tax cut plan, boosting the dollar and Treasury yields. The U.S. dollar edged higher as yields recovered from recent lows, although concerns over slowing economic growth and tariff policies remain. In Europe, government bond yields ticked up, driven by discussions on increased European defence spending and the reaction to U.S. Treasury movements, signaling cautious optimism amid geopolitical shifts. 

FTSE 100 

The FTSE 100 closed at 8,668.87 on Tuesday, registering a slight gain of 0.q1%. Despite a bullish doji candlestick pattern, the index maintains positive market sentiment. It ended near the 21-period Simple Moving Average (SMA), which suggests a favourable short-term outlook. The 50-period SMA provides solid support, reinforcing the potential for continued upward momentum. The Relative Strength Index (RSI) stands at 55.09, indicating healthy bullish strength without reaching overbought levels, which suggests there is still room for further gains. These technical signals point to a positive trend, making the FTSE 100 appealing for short-term investors. On the weekly chart, the FTSE 100 rose 0.84%, closing at 8,659.37. The index remains well above the 50-period SMA at 8,247.27, with support at 8,206.78. Resistance is at 8,850, and a breakout above this level could drive the index towards 8,900. A drop below 8,020, however, would signal downside risk. Investors should monitor these key levels for insights into upcoming price movements. 

 Data Source - Refinitiv