Global Markets Face Pressure as Tariff War Fear Escalates:

Image Souce: Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, was flat at 0.10% on 13 November 2024. Real Estate, Industrials, & Technology sector demonstrated a substantial decline.  

Macro Update:  British grocery sales growth has decelerated, with sales increasing by 4.0% in the four weeks to Nov. 2, down from 4.7% in the previous month, as shoppers hold back for Christmas and Black Friday deals. According to NIQ’s Mike Watkins, consumers are being cautious, prioritizing essentials to afford treats later. Thames Water received crucial support from creditors holding over 75% of its Class A debt for a £3 billion funding lifeline, essential to stabilize finances and avert nationalization. The utility has faced financial challenges since investors deemed it "uninvestible" in March, leading to concerns over its stability. The UK government announced a plan to overhaul the NHS, focusing on value for money and productivity, to make the £23 billion of new funds reduce waiting lists effectively. While committing to improved public services, the government assured markets this spending increase would be offset by future efficiency reforms. 

Top Market Movers: Among top gainers on FTSE 100 index, SMITHS GROUP PLC (LSE: SMIN) witnessed a rise of 10.25% followed by FRESNILLO PLC (LSE: FRES) which gained around 3.29%. 

Commodity Update: The U.S. dollar held near a 6-1/2-month high, while Bitcoin remained just below its record highs, as markets eyed upcoming U.S. inflation data. The October Consumer Price Index (CPI) report, expected later, is forecast to show a 0.3% rise in core inflation, which could impact expectations for a December rate cut. Gold surged 0.44% to USD 2,617.45 per ounce, silver rose 1.11% to USD 31.11, and copper climbed 0.34% to USD 9,179.50 per ton. Brent crude slipped to USD 71.86 a barrel after OPEC revised its demand outlook lower, with broader concerns over the U.S. economy and Trump election speculation. 

Our Stance: Global markets faced declines for a second consecutive day on Wednesday, driven by a renewed surge in U.S. Treasury yields. The MSCI World Index was down 0.2%, with European shares and Asian markets struggling to recover from recent losses. U.S. stock futures also showed weakness, continuing Tuesday’s trend where all major U.S. benchmarks ended lower. The sharp rise in Treasury yields—particularly the 10-year and 2-year yields, which reached their highest since July—reflects investor caution ahead of upcoming U.S. inflation data that could influence Federal Reserve policy on interest rates. Meanwhile, gold prices saw a slight rebound as investors took advantage of recent lows, while the dollar held steady, awaiting both inflation data and guidance from Fed officials. Markets are clearly focused on inflation metrics and Fed signals, with higher yields reflecting concern about the potential persistence of inflation and its impact on future monetary policy. 

FTSE 100 

The FTSE 100 closed at 8,025.27, down 1.22%, with a bearish candlestick pattern and rising volume signalling increased investor caution. The index is trading below its 21-period Simple Moving Average (SMA), acting as resistance, suggesting limited upside potential in the short term. The Relative Strength Index (RSI) at 34.43 indicates the index is approaching oversold conditions, which could mean further downside or a potential reversal if market conditions improve. 

On the weekly chart, the 50-period SMA is providing solid support near 8,020, a key level to watch for potential stabilization. Immediate resistance is at 8,400; a breakout above this could signal a bullish reversal. Conversely, a drop below 8,020 could lead to further weakness and a retest of support at 7,932. 

Key levels to monitor: 8,400 resistance and 8,020 support. These will determine whether the FTSE 100 continues consolidating or experiences further declines.