Chinese banks cut lending rates to boost growth:

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.04% on 21 October 2024. Energy & Basic Materials sector demonstrated a substantial growth. Sectors such as Technology, Utilities and Industrials faced a significant decline.

Macro Update:  Volkswagen's UK financial services unit has been fined £5.4 million for unfairly treating financially vulnerable customers between 2017 and 2023, including repossessing vehicles without considering alternative options. Additionally, the company has agreed to pay £21.5 million in compensation to 110,000 affected customers. Meanwhile, UK property prices in October rose marginally by 0.3%, below the usual 1.3%, as more homes entered the market. Contrary to expectations, British retail sales rose by 0.3% in September, contributing to a 1.9% increase in the third quarter, the largest gain since mid-2021.

Top Market Movers: Among top gainers on FTSE 100 index, Fresnillo PLC (LSE: FRES) witnessed a rise of 4.62% followed by BP PLC (LSE: BP.) which gained around 1.84%.

Commodity Update: On Monday, the dollar index held steady after China's prime rate cut. At the same time, gold soared to a record high amidst escalating Middle East conflicts and an exceptionally close U.S. presidential election. Gold climbed 0.54% to $2,744.90 per ounce, silver rose 3.01% to $34.24 per ounce, and copper increased by 1.01% to $9,728.50 per ton. Meanwhile, Brent crude futures inched up 0.2% to $73.21, following significant losses last week. Traders remain focused on demand signals and potential supply disruptions in the Middle East, contributing to market volatility.

Our Stance: China's central bank recently cut its benchmark lending rates to revive economic growth, lowering the one-year loan prime rate (LPR) to 3.10% and the five-year LPR to 3.60%. While this was expected, it underscores Beijing's continued efforts to boost an economy facing headwinds from a sluggish property market and weak demand. Globally, uncertainty around the U.S. presidential election, along with geopolitical tensions in the Middle East, is driving investors toward safe-haven assets like gold, which hit new highs. Markets are tepid as they await further economic developments.

FTSE 100

On the daily chart, the FTSE index closed at 8,358.25, down 0.32%, forming a bearish candlestick pattern with increased trading volume, which reflects a rise in investor confidence. After opening at 8,356.75, the index experienced some initial uncertainty but eventually gained strong momentum. It is currently trading above the 21-period Simple Moving Average (SMA), a critical support level, and remains above the 50-period SMA on the weekly chart, indicating a favourable long-term outlook. The Relative Strength Index (RSI) is at 58.49, suggesting a modest increase in bullish momentum. After recently testing the key resistance level at 8,400, a breakout above this level could trigger additional bullish sentiment in the market.