London Markets Trading Lower Despite a Rally on Wall Street:

Image Souce: Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 1.01% on 12 November 2024. Basic Materials, Financials & Technology sector demonstrated a substantial decline.  

Macro Update:  British wage growth, excluding bonuses, declined in the third quarter to its lowest level in over two years, with average weekly earnings up 4.8% from a year earlier, down from nearly 8% the previous year. This slowdown could reinforce the Bank of England's view that inflation pressures are easing. Meanwhile, BAE Systems reaffirmed its forecast for a 12% to 14% rise in earnings this year, driven by strong demand amid geopolitical tensions, with further expansion expected in its order book for military equipment. In other news, a Dutch court overturned a 2021 ruling requiring Shell to drastically cut emissions by 2030. The British pound fell to a three-month low as wage growth slowed, unemployment rose, and the U.S. dollar strengthened following Donald Trump's election win. 

Top Market Movers: Among top gainers on FTSE 100 index, ConvaTec Group PLC (LSE: CTEC) witnessed a rise of 20.21% followed by DCC PLC (LSE: DCC) which gained around 13.18%. 

Commodity Update: The U.S. dollar remained near a four-month high on Tuesday as markets awaited key inflation data and Federal Reserve comments. In commodities, gold rose 0.41% to $2,628.30/oz, silver gained 0.24% to $30.69, and copper increased 0.15% to $9,315.50/ton. Crude oil increased by 0.2% to $71.95 per barrel, recovering slightly after sharp losses the previous day. Investor concerns over China’s underwhelming stimulus measures and disappointing inflation data continued to weigh on oil prices. Meanwhile, the dissipation of Tropical Storm Rafael in the Gulf of Mexico eased fears of supply disruptions in the region. 

Our Stance: Bitcoin surged close to the $90,000 mark, driven by optimism around U.S. President-elect Donald Trump's anticipated crypto-friendly stance, with the cryptocurrency rising over 25% since his election. However, Asian markets saw declines on Tuesday, pressured by concerns over potential tariffs and uncertainty around Trump’s trade policies. These worries hit the euro and Chinese yuan, with the euro reaching a seven-month low of $1.0641 and the yuan slipping to a three-and-a-half-month low. In contrast, the U.S. dollar remained strong, with the dollar index nearing a recent four-month high, supported by expectations of higher U.S. interest rates due to the new administration’s policy outlook. The combination of Trump's pro-growth policies and potential crypto-friendliness is fueling enthusiasm in digital assets like Bitcoin, while traditional markets are more cautious amid trade concerns. If these policies lead to sustained risk-on sentiment, cryptocurrencies may continue to benefit, but potential tariffs and currency pressures could create volatility across global markets, especially for emerging economies and trade-dependent sectors. 

FTSE 100 

The FTSE 100 closed at 8,125.19, gaining 0.65%, as a bullish candlestick pattern emerged alongside higher trading volumes, raising some investor optimism. However, the index opened lower at 8,098.21, reflecting a sense of nervousness and uncertainty in the market. Currently, the index is trading below its 21-period Simple Moving Average (SMA), which is acting as resistance, signaling that upward momentum may be constrained for the time being. The Relative Strength Index (RSI) is at 36.94, indicating that the index is approaching oversold conditions and suggesting the potential for further downside, but also hinting at a possible reversal if conditions improve. On the weekly chart, the 50-period SMA is providing solid support around the 8,020 level, which could act as a key floor for the index in the near term. Key levels to watch include the 8,400-resistance level and the 8,020 support level. A breakout above 8,400 would indicate a bullish reversal and the potential for a further upward move, while a drop below 8,100 could signal a deeper correction and a test of the 8,020 support area. These technical levels will be crucial in determining the FTSE 100's short-term direction and the broader market sentiment.