FTSE 100 Sees Modest Gains; Utilities and Industrials Lead the Charge:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.15% on 20 January 2025. Utilities, Industrials & Financials sector has witnessed a substantial growth. Moreover, Real Estate & Basic Materials sector has faced a minor decline. 

Macro Update:  British lawmakers voiced concerns over the potential inefficiency of the newly formed Office for Value for Money, announced by Finance Minister Rachel Reeves as part of efforts to improve public finances. The Treasury Committee noted that the office, with only 12 staff seconded from other government departments, appears to overlap with the National Audit Office, which already has nearly 1,000 employees. Meanwhile, UK property prices experienced a 1.7% monthly rise in early 2025, marking the strongest start-of-year increase since 2020. Despite this, uncertainty over the pace of interest rate cuts continues to weigh on the market. In currency news, the pound fell to a five-month low against the euro amid weak retail sales, sharp declines in core inflation, and growing market bets on Bank of England rate cuts in 2025. Additionally, luxury brand Mulberry Group announced the resignation of its finance director, Charles Anderson, effective Jan. 31, following operational streamlining efforts after reporting a wider first-half loss. 

Top Market Movers: Among top gainers on FTSE 100 index, Fresnillo PLC (LSE: FRES) witnessed a rise of 1.88% followed by Entain PLC (LSE: ENT) which gained around 4.16%. 

Commodity Update: Asian stock markets were cautiously positive on Monday, with investors awaiting policy announcements following Donald Trump's second inauguration. The dollar remained firm as Trump set to take office at noon Eastern Time, promised a "brand new day of American strength." In commodities, gold slipped 0.21% to $2,743.10, silver dropped 0.24% to $31.06, and copper decreased 0.41% to $9,155.50. Brent crude fell slightly by 0.07% to $80.73 per barrel, as expectations that Trump may relax energy sector curbs on Russia in exchange for an end to the Ukraine war outweighed concerns about supply disruptions from sanctions. 

Our Stance: European shares edged higher on Monday, reaching a near three-month high, as gains in banks and travel stocks supported the pan-European STOXX 600 index, which rose 0.1%. Trading volumes were lighter due to a U.S. market holiday, and global focus was on Donald Trump’s swearing-in as U.S. president, where expectations centered on immediate policy announcements on immigration, energy, and tariffs. The dollar softened, and markets displayed cautious optimism, anticipating significant executive actions from Trump. Oil prices fell, with Brent crude down 0.35% to $80.51 per barrel, amid speculation that Trump may ease restrictions on Russia's energy sector in exchange for resolving the Ukraine conflict. Additionally, Trump is expected to streamline LNG export permits, potentially benefiting U.S. energy companies. While markets await further clarity on Trump’s policies, cautious investor sentiment reflects the unpredictable impact of his administration on global markets. 

FTSE 100 

The FTSE 100 closed at 8,391.90 on Friday, up 1.35%, forming a bullish candlestick pattern and breaking through its strong resistance level, closing above it. The index remains above its 21-period Simple Moving Average (SMA), signaling potential short-term upward momentum. The 50-period SMA adds further support, increasing the likelihood of continued gains. The Relative Strength Index (RSI) stands at 69.35, reflecting sustained bullish sentiment. These technical indicators suggest that the FTSE 100 could continue its upward trajectory if support levels hold and it stays above key moving averages, reinforcing the positive outlook for the near term. On the weekly chart, the FTSE 100 rose 3.11%, closing at 8,505.22, above the 50-period SMA at 8,148.56. Key support is at 7,932, with resistance at 8,400. Breaking the 8,400 resistance signals stronger bullish momentum, potentially targeting the next resistance at 8,700. A drop below 8,020 could signal further downside. Monitoring these levels will be crucial for predicting future price movements. 

Data Source - EODHD/Others