British House Prices Drop Unexpectedly; FTSE 100 Shows Mixed Performance:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.31% on 07 January 2025. Sectors such as Energy, Real Estate and Industrials has witnessed a substantial increase. Moreover, Basic Materials, HealthCare and Financials sector has faced a significant decline. 

Macro Update:  British house prices saw an unexpected decline of 0.2% in December, the first drop since March, despite finishing the year 3.3% higher than December 2023. This annual increase was lower than the 4.2% rise forecasted by economists in a Reuters poll. Clothing retailer Next revised its annual profit outlook upward for the fourth time in six months after a strong Christmas season, reporting a 6% increase in full-price sales for the nine weeks ending December 28. The company now projects a pretax profit of £1.01 billion for the financial year ending January, compared to £918 million in 2023/24. Meanwhile, Thames Water's Class B creditors rejected the utility company’s proposed restructuring plan, proposing an alternative strategy they claim offers significantly more funding with better and more flexible terms, highlighting ongoing challenges in the utility sector. 

Top Market Movers: Among top gainers on FTSE 100 index, JD Sports Fashion PLC (LSE: JD.) witnessed a rise of 5.58% followed by Next PLC (LSE: NXT) which gained around 4.35%. 

Commodity Update: The U.S. dollar remained near a one-week low on Tuesday as investors debated whether President-elect Donald Trump's tariff policies would be as aggressive as initially promised. Traders also awaited critical economic data, including December's nonfarm payrolls report, to gauge the Federal Reserve's plans for interest rate hikes. In commodity markets, gold rose slightly by 0.07%, closing at $2,649.30, while silver dropped 0.23% to $30.51. Copper saw a modest increase of 0.05%, reaching $8,971.50. Brent crude oil fell 0.30%, settling at $76.08 per barrel, amid concerns over weaker U.S. and European economic data but remained close to a three-month high due to expectations of increased demand from a cold snap. 

Our Stance: European shares declined on Tuesday, with the STOXX 600 index down 0.3%, reversing gains from the previous session. The downturn was primarily due to declines in healthcare and financial stocks, including notable drops in Novo Nordisk and AstraZeneca. Investors are now focusing on upcoming eurozone inflation data, following reports that U.S. President-elect Donald Trump may adopt a less aggressive tariff strategy, which he later denied. In the energy sector, oil prices fell for the second consecutive session on Tuesday. Brent crude edged down 0.1% to $76.22 per barrel, and U.S. West Texas Intermediate decreased by 0.19% to $73.42 per barrel. This decline is attributed to fading optimism over demand, despite concerns about tighter Russian and Iranian supply due to Western sanctions. The mixed performance across sectors indicates a cautious approach as markets await further clarity on policy directions and economic indicators. 

FTSE 100 

The FTSE 100 closed at 8,249.66 on Monday, marking a 0.31% gain and forming a bullish candlestick pattern, with solid support at 8,002.00. The index finished above its 21-period Simple Moving Average (SMA), signalling potential short-term upward momentum, while remaining above the 50-period SMA suggests limited downside risk. The Relative Strength Index (RSI) is at 54.06, indicating a recovery from oversold levels and reflecting a slightly bullish sentiment. These technical indicators point to a positive short-term outlook for the index. On the weekly chart, the FTSE 100 gained 0.74%, staying above the 50-period SMA at 8,118.50. Key support is at 7,932, while immediate resistance is at 8,400. A breakout above this level could shift toward a more bullish trend, while a drop below 8,020 might signal further downside risk. Investors should monitor these key levels for clearer direction. 

Data Source - EODHD/Others