UK Construction Declines Amid High Borrowing Costs; Trade Bodies Push for Defence Sector Reforms:

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Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.85% on 06 March 2025.  

Macro Update:  Top trade bodies for Britain’s financial services and defense industries, including TheCityUK, UK Finance, and ADS Group, met to outline policy reforms aimed at boosting debt finance and equity capital in the defense sector amid growing European rearmament plans driven by Russia's invasion of Ukraine. Meanwhile, Britain's construction sector contracted sharply in February, with residential house-building seeing one of its fastest declines since 2009 due to weak demand and high borrowing costs. On the economic front, the UK's all-sector PMI fell to a 16-month low in February, and the government is exploring welfare savings through health and disability benefits. In corporate news, Rio Tinto announced a $1.8 billion investment in its Brockman Syncline 1 iron ore project, while UK bond yields rose, fueled by potential increases in debt following proposed fiscal rule relaxations in Germany. 

Top Market Movers: Among top gainers on FTSE 100 index, Schroders PLC (LSE: SDR) witnessed a rise of 9.63% followed by Admiral Group PLC (LSE: ADM) which gained around 5.55%. 

Commodity Update: The euro reached a four-month high against the U.S. dollar on Thursday, driven by a surge in European bond yields, spurred by Germany’s proposed 500-billion-euro infrastructure fund and borrowing limit overhaul. Meanwhile, the U.S. dollar struggled near a four-month low against major peers. President Trump's administration granted a one-month reprieve on auto import levies for Canada and Mexico, highlighting shifting trade dynamics. In commodities, gold rose 0.22% to $2,932.30, silver gained 0.21% to $33.20, and copper increased 0.20% to $9,612.80. Brent crude oil climbed 0.61% to $69.72 amid tariff-related concerns. 

Our Stance: Global markets showed cautious optimism on Thursday, with Asian stocks rising as investors hoped for easing trade tensions after U.S. President Donald Trump exempted some automakers from tariffs for a month. European shares extended their gains, buoyed by this trade reprieve and a surge in bond yields following Germany's proposed fiscal changes, including a €500 billion infrastructure fund and plans to loosen borrowing limits. The euro strengthened, reaching a four-month high against the U.S. dollar, while the greenback weakened, reflecting how quickly the trade landscape can shift. Japanese government bonds experienced sharp declines in response to the biggest sell-off in German long-dated bonds in decades, driven by expectations of fiscal relaxation in Europe. Overall, markets are reacting positively to the prospect of trade de-escalation and fiscal reforms, though the situation remains fluid as global economic policies continue to evolve. 

FTSE 100 

The FTSE 100 closed at 8,755.84 on Wednesday and showed a loss of 0.04%.forming a bearish candlestick pattern, the index remain and maintain a positive market sentiment. It closed near the 21-period Simple Moving Average (SMA), indicating a favourable short-term outlook. The 50-period SMA serves as a strong support level, suggesting the potential for continued upward momentum. The Relative Strength Index (RSI) stands at 57.14, reflecting healthy bullish strength without entering overbought territory, which suggests room for further gains. These technical signals indicate a positive trend, making the FTSE 100 an attractive option for short-term investors. 

Data Source - Refinitiv