Markets Navigate Record Highs Amid Policy Shifts and Geopolitical Tensions:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.64% on 19 February 2025.  

Macro Update:  HSBC has set a target to reduce costs by $1.8 billion by the end of 2025 as part of its CEO’s strategy to enhance profitability while navigating mixed interest rate policies and geopolitical uncertainties. Meanwhile, UK inflation climbed to 3.0% in January, exceeding forecasts of 2.8%, primarily due to higher airfares and rising automotive fuel prices. The Bank of England had anticipated a lower increase, raising concerns about persistent inflationary pressures. The company reported a 14% increase in both operating profit and revenue, supported by heightened government military spending. Additionally, the UK government has launched a decade-long study to assess the long-term effects of vaping on children as young as eight, amid growing concerns that one in four children aged 11-15 have tried vaping, prompting stricter regulations to curb its rising popularity among minors. 

Top Market Movers: Among top gainers on FTSE 100 index, Antofagasta PLC (LSE: ANTO) witnessed a rise of 2.62% followed by SSE PLC (LSE: SSE) which gained around 0.89%. 

Commodity Update: The U.S. dollar remained steady on Wednesday, bolstered by concerns over tariffs and ongoing Russia-Ukraine tensions. Meanwhile, the New Zealand dollar fell after the central bank enacted a large interest rate cut. In the commodities market, gold slipped 0.15% to $2944.50, silver dropped 0.56% to $33.18, and copper declined 0.48% to $9418.10. Brent oil rose 0.20% to $76.04, driven by oil supply disruptions in the U.S. and Russia, while markets awaited further clarity on Ukraine peace talks. Investors are closely eyeing the upcoming Federal Reserve minutes for insights into future rate decisions and policy. 

Our Stance: Global financial markets are navigating a complex landscape marked by record-setting equity performances, shifting monetary policies, and geopolitical tensions. The S&P 500 index achieved a new all-time closing high of 6,129.58 on February 18, 2025, reflecting investor optimism despite uncertainties surrounding U.S. tariff policies and ongoing Russia-Ukraine negotiations. In the Asia-Pacific region, the Reserve Bank of New Zealand responded to domestic economic challenges by reducing its Official Cash Rate by 50 basis points to 3.75%, signaling potential for further easing as inflation moderates.  Concurrently, the U.S. dollar has maintained strength amid these geopolitical tensions and monetary policy adjustments, while the New Zealand dollar experienced volatility following the central bank's rate cut. These developments underscore the delicate balance investors must maintain in an environment influenced by policy decisions and international relations. 

FTSE 100 

The FTSE 100 finished at 8,766.73 on Tuesday, a loss of 0.01%, 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 66.13, 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