Markets on Edge: Germany’s Political Shift, Oil Uncertainty, and Nvidia’s AI Test Loom Large:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.12% on 24 February 2025.  

Macro Update:  Britain is set to ban entry to individuals closely tied to the Russian state, including senior politicians, officials, and business figures, as part of new sanctions marking three years since Russia’s invasion of Ukraine. Meanwhile, the UK job market experienced a 4.5% drop in January job postings, the lowest in four years, despite continued salary growth, highlighting challenges for the Bank of England’s monetary policy. In the financial sector, HSBC plans to raise $1 billion through a perpetual additional Tier 1 bond issuance, signaling efforts to strengthen its capital base. Additionally, British finance minister Rachel Reeves faces growing concerns over public finances, as January tax receipts fell short of expectations. Although a £15.4 billion surplus was recorded, it was well below the £20.5 billion forecast, raising questions about her ability to meet borrowing targets ahead of her fiscal update. 

Top Market Movers: Among top gainers on FTSE 100 index, Centrica PLC (LSE: CNA’) witnessed a rise of 3.83% followed by Bae Systems PLC (LSE: BA.) which gained around 2.43%. 

Commodity Update: The euro strengthened on Monday following Germany’s expected election results, where opposition conservatives emerged victorious. Meanwhile, the U.S. dollar continued its downward trend amid growing concerns over the U.S. economic growth outlook. In commodities, gold held steady at $2,954.30, while silver rose by 0.11% to $33.05. Copper dropped by 0.15%, settling at $9,548.50. Brent crude oil slipped by 0.30% to $74.24, extending last week’s slight decline, as weaker-than-expected U.S. economic data fueled concerns over lower oil demand. Investors are focusing on upcoming GDP data this week for further economic insights. 

Our Stance: Germany's conservative election victory has reduced concerns of political deadlock, offering some hope for fiscal reforms needed to revive its struggling economy. Meanwhile, oil prices continue to decline as investors monitor Ukraine peace talks and the potential resumption of crude exports from northern Iraq, which could ease supply constraints. In the U.S., Nvidia’s upcoming earnings report is set to heavily influence market sentiment, given its outsized role in the AI boom that has driven equity growth for the past two years. With a 6.3% weighting on the S&P 500, Nvidia’s performance could either validate the AI-driven rally or trigger renewed market volatility following last month’s selloff linked to China’s DeepSeek. The political shift in Germany is cautiously optimistic, but the euro’s retreat suggests markets are waiting for concrete policy actions. Meanwhile, Nvidia’s earnings will be a key test for the AI investment narrative, with potential ripple effects across global equities. 

FTSE 100 

The FTSE 100 closed at 8,659.37 on Friday, registering a slight loss of 0.04%. Despite a 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 54.19, 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