FTSE 100 Edges Up to Counter Rising UK Stagflation Fears

index Update: The FTSE 100 index, a key benchmark index for the London Stock Exchange, was trading rose around 0.26% on 22 May 2026.  

Macro Update: The UK economy is experiencing near-stagnation as strong 0.6% Q1 GDP growth gives way to a sharp May services sector slump. Driven by surging global energy shocks, April Inflation hit 2.8% while the Bank of England held rates at 3.75%. Concurrently, public Deficit surged to £24.3 billion, pushing National Debt near 100% of GDP. 

Top Market Movers: Among top gainers on FTSE 100 index, Croda International PLC (LSE: CRDA) witnessed a rise of 4.25% followed by Games workshop Group (LSE: GAW) witnessed a rise of 3.57%. 

Commodity Update: The U.S. dollar remained near six-week highs, while oil prices stayed volatile as investors monitored ongoing U.S.-Iran peace talks. Gold declined 0.47% to USD 4,523.20, silver slipped 0.54% to USD 76.61, while copper gained 0.52% to USD 13,597.50. Brent Crude rose 2.30% to USD 104.96 amid concerns over unresolved disagreements related to Iran’s uranium stockpile and potential controls on the Strait of Hormuz, although markets still remained on track for a weekly decline. 

Our Stance: Our stance is that the UK faces stagflationary risks as early 2026 growth stalls. Severe geopolitical energy shocks and a sharp services slump outweigh temporary inflation dips, while an unsustainable £24.3 billion April deficit severely limits fiscal intervention and heightens structural fragility. 

FTSE 100: The FTSE 100 Index traded near 10,486.80, while remaining slightly above its 50-day SMA near 10,340.23, reflecting a stable near-term structure. Recent price action suggests consolidation following the earlier rebound phase, with the index witnessing range-bound movement amid mixed global sentiment. The 14-day RSI near 55.76 moved above the neutral zone, indicating improving momentum conditions. Immediate support is placed around 10,350–10,250, while resistance is seen near 10,600–10,700.