Markets Dip Amid UK Inflation Surprise, U.S. Fiscal Worries, and Geopolitical Tensions:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.01% on 21 May 2025.  

Macro Update: Britain’s inflation surged to 3.5% in April—its highest since January 2024—up sharply from 2.6% in March, prompting expectations that the Bank of England may delay further rate cuts. Meanwhile, Marks & Spencer faces a £300 million hit in lost operating profit due to a cyberattack that disrupted its automated stock system. JD Sports reported a 2% drop in Q1 sales and warned that U.S. tariffs could further hurt demand, sending its shares down 6%. Separately, Ashmore Group opened a Qatar office to support its $200 million equity fund partnership with the Qatar Investment Authority. 

Top Market Movers: Among top gainers on FTSE 100 index, Fresnillo PLC (LSE: FRES) witnessed a rise of 4.13% followed by Marks and Spencer Group PLC (LSE: MKS) which gained around 3.33%. 

Commodity Update: The U.S. dollar extended losses for a third session on Wednesday, pressured by political uncertainty as President Trump struggled to unite Republicans behind his tax overhaul. Gold gained 0.64% to $3,305.60, silver rose 0.26% to $33.26, and copper increased 0.04% to $9,581.45. Brent crude surged 1.50% to $66.42 after reports of Israeli military planning raised fears of supply disruptions amid rising U.S. crude inventories. 

Our Stance: Global market sentiment turned risk-averse on Wednesday amid rising U.S. fiscal concerns and geopolitical tensions. U.S. stock futures slipped and Treasury yields surged as investors grew uneasy over internal Republican discord delaying President Trump's tax-cut bill, with an unusual overnight House hearing scheduled. Meanwhile, the dollar continued to weaken amid doubts over the tax bill's passage and speculation about U.S. preference for a weaker currency at the G7. Bond yields in the euro zone also edged higher, reflecting broader global uncertainty. Additionally, oil prices rose over 1% following reports of potential Israeli strikes on Iranian nuclear sites, stoking fears of Middle East supply disruptions. 

FTSE 100: The FTSE 100 is hovering around 8,779.29, marginally lower by 0.02%, yet maintains a bullish tone backed by solid market sentiment. The index trades above its 50-period Simple Moving Average, suggesting a strong underlying trend. A recent bullish candlestick pattern reinforces buying interest, while the 14-period RSI at 68.94 signals strong momentum, nearing overbought levels but not signaling exhaustion. As long as key support levels remain intact, the bias stays upward. A clear break above immediate resistance could pave the way for additional upside. Overall, the short-term technical outlook remains positive, favouring continued upward movement.​ 

FTSE 100 Technical Chart, Source - EODHD/Others