Trade Tensions Weigh on Markets as Chip Curbs and Inflation Jitters Fuel Global Volatility

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.21% on 16 April 2025.  

Macro Update:  UK inflation eased to 2.6% in March, marking a three-month low and coming in below both BoE forecasts and analyst expectations, offering some relief on price pressures. However, concerns remain as employer costs and regulatory changes may weigh on future pricing. Meanwhile, WH Smith projected full-year results in line with expectations, with travel outlets offsetting high street weakness, and Mitie Group upgraded its profit outlook, aided by strong service growth and cost efficiency. In legal and corporate developments, Google faces a £5 billion lawsuit in the UK over alleged abuse of its dominant market position, while a UK Supreme Court ruling clarified that “woman” refers to biological sex under equality law. On the energy front, Britain may see record-low power demand this summer due to renewables and imports, while sterling saw mixed performance amid global trade policy uncertainty and soft domestic inflation data. 

Top Market Movers: Among top gainers on FTSE 100 index, Endeavour Mining PLC (LSE: EDV) witnessed a rise of 7.21% followed by Fresnillo PLC (LSE: FRES) which gained around 2.46%. 

Commodity Update: The dollar saw a slight rebound Wednesday as investors paused after weeks of heavy selling, awaiting updates on U.S.-China trade talks. Markets were steady ahead of China’s Q1 GDP and U.S. Fed Chair Powell’s speech. Gold climbed 1.52% to $3,289.40, silver rose 0.33%, and copper slipped 0.24% to $9,138.20. Brent crude edged up 0.10% to $64.72 amid ongoing uncertainty over U.S. trade policy and its impact on global growth. 

Our Stance: Global markets turned risk-averse on Wednesday as escalating U.S.-China trade tensions, particularly around AI chip exports, rattled investor sentiment. Wall Street futures and Asian and European equities declined after Nvidia warned of significant charges due to fresh U.S. restrictions on chip sales to China, impacting both its H20 and AMD's MI308 chips. The MSCI Emerging Markets Index fell 1%, ending its four-day rally, while gold surged to a new high as a haven play, and the dollar weakened. Despite rising geopolitical pressure, U.S. Treasury Secretary Scott Bessent downplayed concerns about China weaponizing its Treasury holdings, emphasizing the U.S. has ample policy tools. All eyes are now on Fed Chair Powell’s speech, as markets look for dovish cues amid trade-driven volatility. 

FTSE 100 

The FTSE 100 is loss of 0.71% on Wednesday, currently trading at 8,190.57, and forming a bearish candlestick pattern. following the loss, the index remains below a key horizontal resistance level, indicating that bearish momentum still lingers. It continues to trade beneath both the 21-period and 50-period Simple Moving Averages, signalling sustained downward pressure. The Relative Strength Index (RSI) stands at 45.29, recovering from bearish territory, which suggests a potential shift toward bullish sentiment. A breakout above resistance could open the door for a short-term rebound, making resistance levels key to watch in the near term. 

Data Source - EODHD/Others