UK Markets Attempt a Rebound, but Trade Tensions Keep Investors on Edge:

Image Source : Krish Capital Pty Ltd

Macro Update:  BP (BP.L) plans to sell 50% of its solar unit, Lightsource bp, to a strategic partner for cash and future investment commitments, aiming to cut costs, boost profits, and address investor concerns. UK Prime Minister Keir Starmer announced plans to scrap a health oversight body to save millions and reduce NHS waiting lists, as the system struggles with pandemic aftereffects, an aging population, and strikes. Meanwhile, UK and U.S. officials are in talks after concerns that Britain pressured Apple to weaken its data encryption, leading Apple to remove its Advanced Data Protection feature. Anglo American (AAL.L) is cutting jobs in the UK and South Africa while restructuring to focus on copper and iron ore and divesting non-core assets. Markets were mixed, with the FTSE 100 flat and the FTSE 250 down 1%, as Trump’s tariff threats on EU wines and alcohol kept investors cautious. 

Commodity Update: The U.S. dollar strengthened on Friday as the euro pulled back from a five-month high, amid rising global trade tensions and fears of a potential economic downturn. In commodities, gold increased 0.21% to $2,997.60, silver gained 0.71% to $34.55, and copper rose 0.69% to $9,819.20. Brent crude climbed 0.40% to $70.60, bolstered by tighter U.S. sanctions on Iranian oil and shipping. However, oil was set for weekly losses due to concerns over oversupply, as Russia-Ukraine ceasefire talks and trade tensions added pressure on the market. 

Our Stance: Global markets are attempting a rebound after a sharp selloff, with Asian shares rising and gold hitting a record high as investors seek safe-haven assets amid escalating trade tensions. Relief over a likely U.S. government shutdown aversion provided some support to equities, but Wall Street ended sharply lower, with the S&P 500 entering correction territory as fears over the U.S. trade war's inflationary impact overshadowed cooling inflation data. The European Union's 50% tariff on American whiskey in response to U.S. steel and aluminum tariffs has further escalated tensions, prompting Trump to threaten a 200% tariff on European wines and spirits. U.S. Treasury yields fell as investors moved into safe-haven government debt, reflecting deepening concerns over how long the trade war will last and its potential to slow growth and fuel inflation. Overall, while markets are attempting to stabilize, persistent trade uncertainties continue to weigh on sentiment. 

FTSE 100 

The FTSE 100 closed at 8,542.56 on Thursday, reflecting a modest 0.02% gain and forming a bullish candlestick pattern. Despite this positive movement, the index remains below both the 21-period and 50-period Simple Moving Averages (SMA) acting as a significant resistance level. This suggests the potential for continued downward momentum in the short term. However, the index currently holds above a crucial horizontal support level, which could signal a reversal from recent lows and a shift toward bullish momentum. The Relative Strength Index (RSI) is at 40.94, indicating mild bearish sentiment, with the possibility of further losses before a potential rebound. While caution is advised due to ongoing market uncertainty, short-term traders may find opportunities near support levels, with momentum shifts crucial for identifying a sustained recovery or continued decline. 

Data Source - Refinitiv