Markets Rally Amid Tech Gains and Stable Inflation, But Trade War Concerns Loom:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.20% on 14 February 2025.  

Macro Update:  The UK government has partnered with AI startup Anthropic to explore using its chatbot, Claude, for enhancing public service interactions. Meanwhile, activist investor Elliott Management has acquired a 5% stake in BP and is urging the company to undertake a major divestment strategy, particularly in its low-carbon business, ahead of its Capital Markets Day on February 26. In regulatory developments, Business Secretary Jonathan Reynolds has called for the Competition and Markets Authority (CMA) to be more agile and less risk-averse, aligning with the government’s growth agenda. Additionally, Thames Water has appealed to regulators for higher customer charges over the next five years, seeking financial stability as it awaits a court decision on a £3 billion rescue plan to manage its £18 billion debt and avoid nationalization. 

Top Market Movers: Among top gainers on FTSE 100 index, Entain PLC (LSE: ENT) witnessed a rise of 6.83% followed by Antofagasta PLC (LSE: ANTO) which gained around 3.18%. 

Commodity Update: The U.S. dollar and major currencies remained stable on Friday as traders evaluated the impact of Washington's planned reciprocal tariffs, which will not be immediately enforced. U.S. President Donald Trump instructed his economic team to develop plans for tariffs on countries taxing U.S. imports. Meanwhile, a U.S. producer price report alleviated concerns about inflation. Commodities have mixed performance: gold gained 0.35% to $2955.80, silver rose 1.58% to $33.24, and copper increased by 0.45% to $9533.95. Brent oil dropped 0.21% to $75.02, recovering from earlier losses as the tariff announcements were postponed until at least April, easing trade war fears. 

Our Stance: Global markets showed a mix of optimism and caution as the S&P 500 closed higher, driven by gains in Nvidia, Apple, and Tesla, following U.S. President Donald Trump's announcement of potential reciprocal tariffs. These tariffs, aimed at matching duties imposed by other countries, could be implemented within weeks, creating uncertainty around global trade relations. Despite this, stocks rallied on positive economic data, with U.S. producer prices rising in January but core inflation indicators remaining stable, easing concerns over aggressive Federal Reserve policy changes. Meanwhile, European markets paused after a strong rally, with the STOXX 600 on track for an eighth consecutive weekly gain, its longest since March 2024. Luxury stocks, particularly Hermes, surged following strong earnings, reflecting resilience in high-end consumer spending despite broader market volatility. This suggests that while global economic uncertainty persists, investors remain focused on corporate earnings strength and central bank policy stability. 

FTSE 100 

The FTSE 100 finished at 8,764.20 on Thursday, loss of 0.49%, despite bearish candlestick pattern, index remain 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 67.79, 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 0.31%, closing at 8,700.53. The index remains well above the 50-period SMA at 8,186.40, 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