FTSE 100 Declines as Stagflation Fears Grip London Markets

index Update: The FTSE 100 index, a key benchmark index for the London Stock Exchange, was trading declined around 0.70% on 07 May 2026. 

Macro Update: As of May 2026, the UK economy faces a stagflationary shock driven by Middle East conflict, with Inflation rising to 3.3% and growth forecasts slashed to 0.6%. The Bank of England held rates at 3.75% but warned of "forceful" hikes if energy costs persist, while gilt yields hit 30-year highs, tightening financial conditions across all sectors. 

Top Market Movers: Among top gainers on FTSE 100 index, JD Sports Fashion PLC (LSE: JD.) witnessed a rise of 6.35% followed by Hiscox Ltd. (LSE: HSX) witnessed a rise of 4.84%. 

Commodity Update: Gold prices moved higher in Asian trading on Thursday after gaining nearly 3% in the previous session, supported by a weaker U.S. dollar and easing inflation concerns tied to hopes of a potential U.S.-Iran peace agreement. Gold rose 0.41% to USD 4,714.40 per ounce, while silver advanced 1.32% to USD 78.30. Copper declined 0.43% to USD 13,356.90. Meanwhile, Brent Crude oil rebounded 0.90% to USD 102.15 per barrel after the previous session’s sharp decline. 

Our Stance: The UK maintains a restrictive monetary stance, with the Bank of England holding rates at 3.75% to counter energy-driven inflation. Fiscal Policy focuses on stability, prioritizing Debt reduction through tax-driven receipts and strict borrowing rules while managing surging 30-year gilt yields. 

FTSE 100: The FTSE 100 Index is trading near 10,372.00, down 0.65% in the session, and is hovering around its 50-day SMA near 10,370.55, indicating a broadly neutral near-term structure. Price action reflects consolidation after the recent rebound, with the index struggling to sustain momentum near higher levels. The 14-day RSI is positioned near 49.28 and remains close to the neutral zone, suggesting balanced momentum conditions without a clear directional bias. Immediate support is placed around 10,250–10,100, while resistance is seen near 10,550–10,700. A decisive move beyond either range could influence the index’s near-term direction.