Markets Juggle Policy Shifts and Trade Tensions Amid Cooling Inflation and Defence Resurgence:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.05% on 03 June 2025.  

Macro Update: Euro zone inflation eased to 1.9% in May, below the ECB’s target, reinforcing expectations for another rate cut despite persistent global trade tensions, while underlying inflation also slowed due to softer services prices. Meanwhile, the OECD revised global growth forecasts down to 2.9% for 2025–26, citing deepening impacts from the U.S.-led trade war. In the UK, the government announced a shift in defence strategy, emphasizing drones and cyber capabilities amid rising geopolitical threats. British American Tobacco slightly raised its sales growth forecast, CMR Surgical began a potential $4 billion sale process, and the BoE was urged to reassess the effects of quantitative tightening. 

Top Market Movers: Among top gainers on FTSE 100 index, Centrica PLC (LSE: CNA’) witnessed a rise of 3.44% followed by Airtel Africa PLC (LSE: AAF) which gained around 2.76%. 

Commodity Update: The dollar dropped to a six-week low Tuesday amid concerns over U.S. economic weakness tied to the ongoing trade war. Steel and aluminum tariffs will double to 50% Wednesday, the same day trade deal offers are due. Gold slipped 0.16% to $3,391.90, silver fell 1.30% to $34.24, and copper dipped 0.20% to $9,576.15. Brent crude rose 0.85% to $65.18 on supply fears linked to Iran and Canadian wildfires. 

Our Stance: Global markets are displaying cautious optimism amid escalating trade and geopolitical tensions. While the S&P 500 closed higher on hopes of constructive U.S. trade talks, renewed tariff threats from President Trump—who plans to double duties on steel and aluminum—have unsettled investor sentiment, weighing on European shares, U.S. futures, and emerging Asian currencies. The dollar remains weak as concerns grow over economic damage from prolonged trade disputes, while oil prices have edged higher due to ongoing conflicts in Ukraine and the Middle East. Market attention now turns to an expected conversation between Trump and Xi Jinping, which could influence the direction of U.S.-China trade relations. 

FTSE 100: The FTSE 100 edged down 0.06% on Tuesday, currently trading at 8,769.28 while maintaining its bullish momentum amid strong investor sentiment. The index remains above its 50-period Simple Moving Average, highlighting the strength of the prevailing uptrend. A recent bullish candlestick pattern and a steady 14-period RSI at 62.75 suggest building momentum and potential for further short-term upside. The broader trend stays intact as long as key support levels hold. A clear breakout above immediate resistance could pave the way for more gains, though traders should monitor for consolidation or early signs of weakness that could impact the short-term outlook.​ 

FTSE 100 Technical Chart, Source - EODHD/Others