Tech Sell-Off Deepens Amid AI Concerns; Investors Pivot to Asian Stocks and Oil:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.36% on 25 February 2025.  

Macro Update:  Millions of British households face higher energy bills from April as Ofgem announced a 6.4% rise in its domestic price cap due to surging wholesale prices, marking the third consecutive quarterly increase. Concurrently, Britain imposed new sanctions marking the third anniversary of Russia's invasion of Ukraine, targeting individuals linked to Russia and North Korea, as well as Kyrgyzstan-based Keremet Bank. Meanwhile, Bank of England policymakers remain divided on the pace of interest rate cuts despite unanimous support for reductions. Medical products company Smith+Nephew reported stable annual sales and profits, benefiting from improved U.S. demand, offsetting slower growth in China, while the FTSE 100 closed flat amid declines in mining stocks impacted by tariff concerns and fluctuating Chinese demand. 

Top Market Movers: Among top gainers on FTSE 100 index, Smith & Nephew PLC (LSE:SN.) witnessed a rise of 4.53% followed by HSBC Holdings (LSE: HSBA) which gained around 2.36%. 

Commodity Update: The dollar strengthened on Tuesday after hitting its lowest level two months earlier, supported by safe-haven flows following U.S. President Donald Trump’s announcement that tariffs on Mexico and Canada would proceed as planned. In commodity markets, gold remained steady at $2,964.80, while silver saw a slight increase of 0.52%, reaching $33.77. Copper fell by 0.02% to $9,487.50. Brent crude oil gained 0.51%, settling at $75.16, driven by fresh U.S. sanctions on Iran, raising concerns over potential supply disruptions. Investors are closely watching upcoming GDP data for further economic direction. 

Our Stance: Recent global market trends indicate a cautious approach to U.S. technology stocks, with the Nasdaq Composite down 1.2% amid investor uncertainty around Nvidia's upcoming earnings, given increasing competition in the AI sector. Hedge funds have notably shifted towards Asian equities, particularly in China and Hong Kong, marking their highest bullish positioning since 2016, reflecting improved regional confidence. Meanwhile, cryptocurrencies like Bitcoin and Ethereum fell to multi-month lows due to market volatility and security breaches, including a significant hack on Bybit. Oil prices slightly increased, driven by fresh U.S. sanctions on Iran, sparking supply concerns. 

FTSE 100 

The FTSE 100 closed at 8,658.98 on Monday, registering a slight loss of 0.01%. 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 54.14, 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