Markets steady on Fed cut hopes, while UK grapples with rising borrowing costs:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.29% on 05 September 2025.  

Macro Update: UK financial and housing markets are under strain, with long-dated gilt yields hitting a 27-year high, reflecting deep-rooted fiscal challenges as Britain faces the sixth-highest public debt and fifth-highest deficit among advanced economies. While house prices rose 0.3% in August, up 2.2% year-on-year, affordability concerns persist amid high borrowing costs. Berkeley reaffirmed profit forecasts for FY26–27, though the wider sector struggles with weak demand and planning hurdles. Political uncertainty also weighs, with Deputy PM Angela Rayner under investigation for tax underpayment. Meanwhile, the Bank of England is proposing tighter regulation of gilt repo markets to bolster resilience after stresses seen in 2022, highlighting systemic risks alongside fiscal and housing pressures. 

Top Market Movers: Among top gainers on FTSE 100 index, Melrose Industries PLC (LSE: MRO) witnessed a rise of 2.43% followed by Entain PLC (LSE: ENT) which gained around 2.01%. 

Commodity Update: The dollar steadied on Friday as bond markets calmed, and investors awaited key U.S. jobs data that could strengthen the case for a Fed rate cut. Commodities were mixed: gold edged up 0.07% to $3,609.10, silver rose 0.15% to $41.48, and copper gained 0.45% to $9,935.45. Brent crude fell 0.30% to $66.38, marking its third straight decline ahead of the OPEC+ meeting on potential output hikes. 

Our Stance: Markets remain wary as geopolitical and fiscal shocks ripple through global and UK economies. U.S. President Trump’s landmark executive order slashing Japanese auto tariffs from 27.5% to 15% brings relief—but smaller automakers like Mitsubishi and Mazda remain vulnerable amid persistent tariff pressures and rising consumer prices. Meanwhile, markets await clarity on Fed independence, with nominee Stephen Miran under scrutiny as political tension mounts around central bank autonomy. In Europe, equities are cautiously buoyed by anticipated U.S. rate cuts, even as corporate earnings and regulatory headwinds weigh. Overall, investor sentiment reflects growing unease over policy uncertainty, trade volatility, and central bank credibility. 

FTSE 100 

The FTSE 100 is trading at 9,218.18, up 0.01%, holding above the crucial 8,900 support and the 50-day SMA at 9,069.18. The index is also positioned above its 21-day SMA of 9,193.93, though momentum remains limited. The RSI at 56.26 indicates neutral sentiment, consistent with ongoing consolidation. Key support lies at 8,950, and a breakdown below this level could trigger further weakness. On the upside, resistance is seen at 9,500, with a breakout potentially paving the way toward 9,800. 

Source - EODHD/Others