Global Markets Brace for Impact as U.S. Tariffs Spark Concerns Over Inflation, Corporate Profits, and Economic Slowdown:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.38% on 04 March 2025.  

Macro Update:  U.S. President Donald Trump suggested that a deal to open Ukraine’s mineral resources to U.S. investment could still happen, despite frustrations with Kyiv, as European leaders proposed a truce in the Russia-Ukraine war. The U.S. views this deal as a way to recover some of the aid provided to Ukraine. Meanwhile, Shell announced that Zoe Yujnovich, the Director of Integrated Gas and Upstream, will step down after over a decade, with Cederic Cremers and Peter Costello appointed to streamline leadership. Greggs reported slower sales growth in early 2025, citing weather conditions and consumer confidence, with a 1.7% rise in like-for-like sales in the first nine weeks of the year. In the UK, grocery inflation held steady at 3.3%, with supermarkets increasing promotions to manage rising costs. 

Top Market Movers: Among top gainers on FTSE 100 index, Intertek Group PLC (LSE: ITRK) witnessed a rise of 7.27% followed by Fresnillo PLC (LSE: FRES) which gained around 3.38%. 

Commodity Update: The Canadian dollar and Mexican peso remained near their lowest levels in a month on Tuesday, driven by fears of a trade war after U.S. President Donald Trump announced 25% tariffs on goods from both countries. Trump stated that there was "no room left" for a deal unless fentanyl flows into the U.S. were curtailed. In commodities, gold dropped 0.12% to $2,897.80, silver fell 0.55% to $32.13, and copper slid 0.35% to $9,377.80. Brent crude oil declined 0.75% to $71.08, as markets reacted to Trump’s pause in military aid to Ukraine and tariff threats. Investors are watching upcoming NFP data. 

Our Stance: The recent implementation of significant tariffs by President Donald Trump on imports from Canada, Mexico, and China has introduced considerable volatility and uncertainty into global markets. The U.S. stock market, notably the S&P 500, has experienced declines, reflecting investor apprehension over potential inflationary pressures and reduced corporate profits resulting from these trade barriers. Analysts express concern that these tariffs could lead to increased consumer prices and disrupt established supply chains, particularly affecting industries like automotive and agriculture. Historical data suggests that such protectionist policies may have adverse long-term effects on both domestic and international economies, including reduced GDP growth and increased consumer prices. In summary, while the intent of these tariffs is to address specific trade grievances, their broader economic impact raises concerns about inflation, market stability, and the potential for a protracted trade war. 

FTSE 100 

The FTSE 100 opened at 8,809.74 on Monday and showed a gain of 0.57%, surge to 8,859.82. forming forming a bullish candlestick pattern, the index continues to maintain a positive market sentiment. It closed near the 21-period Simple Moving Average (SMA), indicating a favourable short-term outlook. The 50-period SMA serves as a strong support level, suggesting the potential for continued upward momentum. The Relative Strength Index (RSI) stands at 69.86, reflecting healthy bullish strength without entering overbought territory, which suggests room for further gains. These technical signals indicate a positive trend, making the FTSE 100 an attractive option for short-term investors. 

Data Source - EODHD/Others