Markets React to Inflation, Trade Uncertainty, and Geopolitical Shift:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.08% on 18 February 2025.  

Macro Update:  British pay growth accelerated, with private-sector wages rising at the fastest pace in a year, reinforcing the Bank of England’s cautious stance on interest rate cuts despite economic weakness. Anglo American announced the sale of its nickel business for up to $500 million as part of its strategic shift toward copper and iron ore. Prime Minister Keir Starmer emphasized the need for a U.S. security commitment for lasting peace in Ukraine, while discussions on potential British peacekeeping troops remain in early stages. Serica Energy suspended operations at its Triton offshore platform due to storm-related damages, expecting production to resume by mid-to-late March. Meanwhile, Britain's FTSE 100 closed higher, led by gains in aerospace and defence stocks, particularly BAE Systems, while some banks declined after the Supreme Court’s ruling in a car loan mis-selling case. 

Top Market Movers: Among top gainers on FTSE 100 index, HSBC Holdings PLC (LSE: HSBA) witnessed a rise of 1.69% followed by Ashtead Group PLC (LSE: AHT) which gained around 1.61%. 

Commodity Update: The U.S. dollar remained near two-month lows on Tuesday, as traders evaluated tariff concerns and the potential for U.S. rate cuts. Meanwhile, the Australian dollar stayed near its highest level in two months despite market expectations of an imminent rate cut. Investor focus shifted to Wednesday's release of the Federal Reserve's January meeting minutes, to assess how policymakers are addressing risks of a broader tariff war linked to President Trump's trade policies. In commodities, gold rose 0.34% to $2921.15, silver climbed 0.11% to $32.91, and copper increased 0.02% to $9399.95. Brent oil fell 0.20% to $75.10 amid a Ukrainian drone attack and concerns over OPEC+ output plans. 

Our Stance: The global markets are reacting to key economic and geopolitical developments, with investor sentiment shaped by inflation concerns, trade policies, and geopolitical tensions. In the U.S., Walmart's upcoming earnings report will provide insight into consumer resilience amid inflation and uncertainty over President Trump's tariffs, while the S&P 500 has remained strong despite shifting expectations on interest rate cuts. Australia's central bank initiated its rate-cutting cycle cautiously, supporting the Australian dollar. Meanwhile, the prospect of a ceasefire between Russia and Ukraine has fueled market optimism, potentially easing U.S. trade tensions and stabilizing energy prices, although concerns remain as Ukraine and European nations are excluded from ongoing negotiations. European leaders are set for an emergency summit, highlighting the geopolitical uncertainty that continues to drive global market trends. 

FTSE 100 

The FTSE 100 finished at 8,768.46 on Monday, a gain of 0.41%, 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 69.91, 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. 

Data Source - Refinitiv