Markets Rattled by U.S. Credit Downgrade, Debt Concerns, and Slowing Growth:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.44% on 19 May 2025.  

Macro Update: The EU and UK reached a preliminary agreement on defence, fisheries, and youth mobility, enabling UK firms to access EU defence contracts, pending approval by all 27 EU nations. Diageo announced a $500 million cost-saving plan by 2028 and aims to generate $3 billion in annual free cash flow from 2026, with reduced tariff exposure in North America. UK PM Keir Starmer discussed the Russia-Ukraine war with Western leaders, emphasizing a ceasefire and potential sanctions on Russia ahead of U.S. talks with Putin. Meanwhile, BT is in advanced talks to sell its TNT Sports stake to Warner Bros Discovery, and UK house prices posted their slowest spring increase since 2016, rising just 0.6% month-on-month. 

Top Market Movers: Among top gainers on FTSE 100 index, Fresnillo PLC (LSE: FRES) witnessed a rise of 2.01% followed by EasyJet PLC (LSE: EZJ) which gained around 1.45%. 

Commodity Update: The dollar weakened Monday amid mixed Chinese economic data, highlighting domestic struggles and the impact of U.S. tariffs on exports. Meanwhile, the White House maintained pressure on trade partners. Gold surged 1.41% to $3,228.60, silver rose 0.72% to $32.58, while copper edged down 0.04% to $9,451.60. Brent crude slipped 0.20% to $65.27 as investors awaited Iran-U.S. nuclear talks and further Chinese economic indicators. 

Our Stance: Global markets faced renewed pressure as Moody’s downgraded the U.S. sovereign credit rating, citing ballooning fiscal deficits and rising debt levels nearing $36 trillion. The move triggered a rise in longer-dated Treasury yields, a drop in U.S. stock futures, and weakened the dollar, particularly against the yen. Meanwhile, Trump’s stalled tax-cut bill cleared a key congressional hurdle, raising fresh concerns about further fiscal strain with estimates of $3–5 trillion in added debt. European and Asian equities also slipped, driven by both the downgrade and underwhelming Chinese economic data, while oil prices declined amid rising doubts about global growth. 

FTSE 100 

The FTSE 100 is trading near 8,629.48, down 0.63%, yet it remains above a key support level, suggesting underlying strength and continued bullish sentiment. Although a recent bearish candlestick pattern hints at waning momentum, the index staying above its 50-period Simple Moving Average reinforces a positive technical outlook. The 14-period RSI has risen to 59.40, indicating improving market participation and growing buying interest. While near-term caution is warranted, the broader trend remains constructive. A strong breakout above immediate resistance could trigger a renewed upside, supported by sustained demand. Overall, the short-term outlook for the FTSE 100 stays favourable with upside potential.​ 

FTSE 100 Technical Chart, Source - EODHD/Others