Brent Crude Oil and Copper Prices Rise as Global Economic Growth Signs Emerge:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.17% on 08 January 2025. Sectors such as Energy, Real Estate and Utilities has witnessed a substantial decline. Moreover, Industrials, HealthCare and Financials sector has faced a significant growth. 

Macro Update:  Shell revised its Q4 liquefied natural gas (LNG) production outlook and reported a significant decline in oil and gas trading results compared to the previous quarter. In its trading update ahead of the January 30 full-year results, Shell announced $1.5 billion to $3 billion in non-cash, post-tax impairments, with up to $1.2 billion linked to its renewables division in Europe and North America. UK investors added a record £27.2 billion to equity holdings in 2024, surpassing the previous high of £19.8 billion in 2021, according to Calastone. This growth was driven by passive investment products, which saw inflows rise sharply from £8 billion in 2023. Marks & Spencer’s food division delivered strong Christmas sales, with a 6.8% increase in the four weeks to December 28, boosting its market share to a record 4.8%. It was the UK’s second-fastest-growing brick-and-mortar food retailer, following Lidl, which saw sales rise 8.5%. 

Top Market Movers: Among top gainers on FTSE 100 index, HSBC Holdings PLC (LSE: HSBA) witnessed a rise of 1.78% followed by Bae Systems PLC (LSE: BA.) which gained around 1.60%. 

Commodity Update: The U.S. dollar strengthened on Wednesday, while the Japanese yen weakened near levels that prompted intervention last year, following strong U.S. economic data that pushed yields higher and reduced expectations for Federal Reserve rate cuts. In commodity markets, gold slipped 0.10% to $2,662.90, while silver rose 0.08% to $30.71. Copper saw a slight gain of 0.25%, reaching $9,008.50. Brent crude oil increased 0.42%, closing at $77.37 per barrel, driven by tighter supplies from Russia and OPEC, and a surprise rise in U.S. job openings, signalling economic growth and higher oil demand. Markets await upcoming payroll data for clarity on rate decisions. 

Our Stance: Global markets exhibited mixed trends on Wednesday, with European shares advancing slightly, supported by gains in healthcare and financial stocks, while focus remained on global monetary policy trends for 2025. Oil prices rose due to tighter supplies from Russia and OPEC, coupled with an unexpected rise in U.S. job openings, signaling potential economic growth and increased oil demand. Asian dollar bond issuance is projected to rise by 20% in 2025, driven by Chinese debt deals and anticipated U.S. interest rate cuts, with $6 billion worth of dollar bonds already issued in early January. However, Chinese and Hong Kong stock markets declined, particularly in chip and consumption sectors, as geopolitical tensions and economic uncertainties dampened investor sentiment, with the CSI300 and Shanghai Composite indices dropping by 1.5% and 1.46%, respectively. 

FTSE 100 

The FTSE 100 closed at 8,245.28 on Tuesday, registering a slight 0.05% loss and forming a bearish candlestick pattern, with strong support at 8,002.00. Despite this, the index remains above its 21-period Simple Moving Average (SMA), signaling potential short-term upward momentum. The 50-period SMA offers additional downside protection, suggesting limited risk. The Relative Strength Index (RSI) of 53.57 indicates a recovery from oversold conditions, reflecting a mildly bullish sentiment. These technical factors point to a positive short-term outlook for the index. On the weekly chart, the FTSE 100 gained 0.74%, holding above the 50-period SMA at 8,118.50. Support is at 7,932, while resistance stands at 8,400. A breakout above this level could trigger a more bullish trend, while a drop below 8,020 may signal further downside risks. Monitoring these levels will provide clearer direction for investors. 

 Data Source - EODHD/Others