UK braces for fiscal tightening as global markets reel from trade tensions & inflation worries:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.07% on 26 March 2025.  

Macro Update:  British finance minister Rachel Reeves is expected to announce spending cuts to reassure investors amid faltering growth and rising borrowing costs, aiming to maintain budgetary discipline despite a downgraded 2025 outlook. A sharper-than-expected drop in UK inflation to 2.8% in February, driven by falling clothing and footwear prices, offered some relief ahead of her fiscal update. Markets reacted with a decline in bond yields and the pound. Meanwhile, Barclays appointed Scott Schulte as global co-head of its investment grade syndicate. Homebuilder Vistry saw its shares drop over 6% after reporting a 35% profit slump, cancelling its final dividend, and announcing £200 million in cost savings. In contrast, Ithaca Energy’s shares rose 7% after forecasting increased 2025 production following its acquisition of Eni’s UK assets and declaring a $200 million interim dividend, reaffirming a $500 million dividend target for next year. 

Top Market Movers: Among top gainers on FTSE 100 index, Rentokil Initial PLC (LSE: RTO) witnessed a rise of 2.29% followed by Shell PLC (LSE: SHEL) which gained around 2.12%. 

Commodity Update: On Wednesday the U.S. dollar remained stable as markets awaited further details on President Trump’s trade policies, particularly the new round of tariffs next week. Trump introduced secondary tariffs of 25% on countries purchasing oil or gas from Venezuela, initially pushing oil prices up. However, Black Sea maritime security deals involving the U.S. tempered the impact. In commodities, gold dipped slightly to $3,051.30, silver rose marginally to $34.19, and copper dropped 1.19%. Brent crude climbed 0.40% to $73.29 per barrel, supported by a U.S. crude stockpile drop. 

Our Stance: Global sentiment remains fragile as the Trump administration attempts damage control following an accidental security breach involving sensitive war plans, triggering calls for resignations. Simultaneously, U.S. consumer confidence has plunged to its lowest in over four years, with a 12-year low in future expectations, largely due to fears over recession, inflation, and uncertainty stemming from trade tariffs. European and Asian markets reflect this unease, with European stocks dipping despite optimism from potential German stimulus, and Asian indices cautiously following Wall Street’s slight gains. Investors are closely watching for clarity on Trump’s trade policies, particularly ahead of the anticipated April 2 tariff announcement. While the U.S. dollar holds steady and Wall Street shows selective strength—buoyed by stocks like Apple—market participants remain wary, hoping for leniency in tariff enforcement but preparing for continued volatility driven by geopolitical tension and policy uncertainty. 

FTSE 100 

The FTSE 100 is trading at 8,661.59, holding steady on Wednesday after soft CPI data, forming a doji candlestick pattern. The index remains above its 50-period Simple Moving Average (SMA), providing support, but is trading below its 21-period SMA, signalling potential short-term bearish pressure. As both SMAs converge, it suggests a watchful stance is needed. This technical setup calls for caution, as further price movements will be crucial for clarity. The index is maintaining its position above a key horizontal support level, indicating some positive sentiment after recent lows. The Relative Strength Index (RSI) is at 50.47, showing moderate bullishness with room for growth. In light of market uncertainty, short-term traders should closely monitor key support levels, as momentum shifts will determine whether the rally persists or a pullback occurs. The upcoming sessions will be pivotal in confirming the market’s direction. 

Data Source - EODHD/Others