Markets React to U.S. Tariff Threats, BP Surge, and Trump’s Russia-Ukraine Talk:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.54% on 10 February 2025.  

Macro Update:  BP's shares surged 7% to 462.85 pence, reaching their highest level since August, following news that Elliott Management has acquired a stake in the company. The activist investor is expected to push for strategic changes and board restructuring, which fueled investor optimism. Meanwhile, Britain’s job market is showing further signs of cooling, with staff demand declining at the fastest rate since mid-2020, according to a survey by the Recruitment and Employment Confederation and KPMG. The data also showed one of the slowest increases in starting pay for permanent hires since early 2021, a development that may ease the Bank of England’s concerns over inflationary wage pressures. In the energy sector, the UK government and Drax have agreed to halve Drax’s 2027-2031 subsidies, a move aimed at reducing costs for consumers while ensuring the company shifts to more sustainable woody biomass sources. UK stocks edged lower, with the FTSE 100 pulling back from record highs on Friday. Investor sentiment remained cautious amid uncertainty over potential tariff changes and weaker-than-expected U.S. jobs growth, which added to concerns about the global economic outlook. 

Top Market Movers: Among top gainers on FTSE 100 index, BP PLC (LSE: BP.) witnessed a rise of 6.44% followed by Airtel Africa PLC (LSE: AAF) which gained around 2.42%. 

Commodity Update: The U.S. dollar strengthened on Monday following President Donald Trump's announcement of a new 25% tariff on all steel and aluminium imports, putting pressure on the euro and commodity-driven currencies like the Australian and New Zealand dollars. Trump also stated he would unveil reciprocal tariffs on Tuesday or Wednesday, targeting countries that impose similar duties on the U.S. This escalation in trade tensions heightened concerns over a global trade war, with China’s retaliatory tariffs on U.S. goods taking effect Monday. In commodities, gold rose 0.41% to $2,899.30, silver fell 0.47% to $32.29, copper decreased 0.69% to $9,399.20, and Brent oil surged 0.50% to $75.06. 

Our Stance: Markets are assessing the potential implications of U.S. President Donald Trump's announcement of new 25% tariffs on all steel and aluminum imports into the United States, a move that has introduced concerns over a possible escalation in trade tensions. In a separate development, President Trump indicated that the United States is making progress in discussions aimed at ending the ongoing war between Russia and Ukraine. While aboard Air Force One, Trump suggested that he had been in contact with Russian President Vladimir Putin, though he declined to provide specific details about their communications. He emphasized the importance of bringing the conflict to a close, stating, "We have to get that war ended." The combination of these events reflects a complex global landscape where economic policies and geopolitical efforts are deeply intertwined. Diplomatic initiatives to resolve international conflicts, such as the Russia-Ukraine war, are ongoing but fraught with challenges. Investors and policymakers alike must navigate these multifaceted issues carefully, balancing economic interests with the pursuit of global stability. 

FTSE 100 

The FTSE 100 finished at 8,700.53 on Friday, losing by 0.31%, and formed a bearish candlestick pattern, signalling 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 67.78, 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 8,800, 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