Tech Stocks Rebound as Nvidia Recovers; Markets Await Fed Decision Amid Uncertainty:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.31% on 29 January 2025. HealthCare, Technology & Industrials sector has witnessed a substantial growth. Moreover, Basic Materials, Utilities & Energy sector has faced a major decline. 

Macro Update:  British finance minister Rachel Reeves is set to defend her economic strategy amid concerns that her budget plan, which increased business taxes, has slowed growth despite promises to make Britain the fastest-growing G7 economy. Meanwhile, Morrisons reported a 4.9% rise in like-for-like sales in Q4, reflecting improved product availability, competitive pricing, and an expanding loyalty program. In corporate deals, American Axle announced a £1.16 billion acquisition of GKN Automotive owner Dowlais, representing a 25% premium to its prior stock close, sending Dowlais shares up 8.6%. The FTSE 100 gained 0.3%, logging its best day in over a week, while the FTSE 250 rose 1.1%, with household goods and home construction stocks leading sector gains at 2.4%. 

Top Market Movers: Among top gainers on FTSE 100 index, Beazley PLC (LSE: BEZ) witnessed a rise of 3.39% followed by Fresnillo PLC (LSE: FRES) which gained around 2.36%. 

Commodity Update: The U.S. dollar gained against the yen on Wednesday following fresh tariff threats from the Trump administration and easing concerns over a low-cost Chinese AI model. In commodities, gold increased by 0.10% to $2,797.90, silver remained at $30.85, while copper dropped by 0.31% to $8,999.50. Brent crude saw a minimal decrease of 0.01%, closing at $77.47 per barrel, as market participants weighed the potential effects of U.S. tariffs on Canadian and Mexican imports. Meanwhile, the focus shifted to upcoming updates on the Federal Reserve's interest rate decisions and U.S. GDP data later in the week. 

Our Stance: Technology stocks in Asia-Pacific surged, mirroring Wall Street’s recovery after Nvidia rebounded 8.9% following its record-breaking $593 billion single-day loss, which was triggered by concerns over a low-cost Chinese AI model threatening U.S. dominance. Despite this, U.S. bond investors remained cautious, adjusting portfolios defensively amid uncertainty over Federal Reserve policy and the Trump administration’s tariff warnings. Traders rotated back into the U.S. dollar from safe-haven assets like the yen, while Eurozone bond yields edged lower ahead of key central bank decisions, with Germany’s 10-year yield dipping to 2.54%. Market focus now turns to the Federal Reserve’s interest rate decision, which could shape economic expectations for 2025. 

FTSE 100 

The FTSE 100 closed at 8,533.87 on Tuesday, gaining 0.35%, forming a bullish candlestick pattern. The index remains above the 21-period Simple Moving Average (SMA), suggesting a positive short-term outlook. With the 50-period SMA acting as strong support, the upward momentum appears likely to continue. The Relative Strength Index (RSI) at 66.43 signals robust bullish momentum, though it’s not yet overbought, indicating potential for further buying pressure. On the weekly chart, the FTSE 100 held steady, closing at 8,502.35, a slight 0.03% decline. It remains well above the 50-period SMA, currently at 8,167.15, and key support lies at 7,932. Resistance is seen at 8,400, and a break above this level could signal stronger bullish momentum, potentially eyeing the next resistance at 8,700. On the other hand, a move below 8,020 could raise concerns of further downside risk. Investors should focus on these levels to gauge the index’s potential price action in the coming weeks. 

Data Source - Refinitiv