UK Business Outlook Plummets:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.08% on 06 January 2025. Sectors such as Energy, Financials and Basic Materials has witnessed a substantial increase. Moreover, Utilities, Consumer Cyclicals and Industrials sector has faced a significant decline. 

Macro Update:  Aldi UK reported a 3.4% increase in sales, exceeding £1.6 billion in the four weeks leading up to December 24, as shoppers opted for its premium 'Specially Selected' range, which saw a 12% year-on-year rise in sales. This growth reflects a trend of customers trading up to higher-quality own-label products. Meanwhile, a business survey by the British Chambers of Commerce revealed that British companies are experiencing their gloomiest outlook since former Prime Minister Liz Truss' "mini-budget" in September 2022, following significant tax increases in the October budget introduced by the new Labour government. Confidence in future sales over the next 12 months has plummeted to its lowest level since late 2022, with taxation concerns at a record high since the survey began in 2017. Separately, Elon Musk, in a surprising move, withdrew his support for Nigel Farage as leader of Britain's right-wing Reform UK party. Musk criticized Farage’s leadership, stating, "The Reform Party needs a new leader. Farage doesn’t have what it takes," shortly after Farage had described Musk as a friend who made Reform appear "cool.". 

Top Market Movers: Among top gainers on FTSE 100 index, JD Sports Fashion PLC (LSE: JD.) witnessed a rise of 6.36% followed by Antofagasta PLC (LSE: ANTO) which gained around 4.93%. 

Commodity Update: The U.S. dollar eased slightly on Monday but remained near a two-year high as traders awaited key economic data, including December's nonfarm payrolls report, to assess the Federal Reserve's interest rate plans. In commodities, gold saw a slight dip of 0.04%, settling at $2,653.60, while silver gained 0.17% to $30.11, and copper rose 1.12% to $8,900.00. Brent crude oil increased by 0.20%, reaching $76.66 per barrel. Oil prices remained at their highest since October, with investors focusing on the impact of cold weather and Beijing’s economic stimulus on global fuel demand. 

Our Stance: Global markets face heightened volatility as 2025 begins, driven by geopolitical concerns and key economic data releases. In China, authorities are stabilizing the yuan and stock markets amid fears over President Trump’s return and uncertainties around Beijing's economic revival. European shares rose, led by technology and banking sectors, ahead of inflation data in Europe and U.S. employment figures. Asian markets showed mixed results, reflecting caution over potential U.S. trade policies. Reports of Canadian Prime Minister Trudeau’s possible resignation slightly weakened the U.S. dollar against the Canadian dollar, though markets had largely priced this in. The U.S. December payrolls report, expected to show a 150,000 job increase with 4.2% unemployment, remains pivotal for Federal Reserve policy and economic outlooks. 

FTSE 100 

The FTSE 100 closed at 8,223.98 on Friday, marking a 0.44% loss and forming a bearish candlestick pattern, with solid support at 8,002.00. The index remains below its 21-period Simple Moving Average (SMA), suggesting potential short-term downside pressure. However, holding above the 50-period SMA indicates limited downside risk. The Relative Strength Index (RSI) is at 51.66, showing recovery from oversold levels and a slightly bullish sentiment. On the weekly chart, the FTSE 100 gained 0.74%, staying above the 50-period SMA at 8,118.50. Key support is at 7,932, while immediate resistance is at 8,400. A breakout above this level could shift toward a more bullish trend, while a drop below 8,020 might signal further downside risk. Investors should monitor these key levels for clearer direction. 

Data Source - EODHD/Others