UK fiscal strains and global debt jitters weigh on markets

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 0.57% on 03 September 2025.  

Macro Update: Britain faces mounting fiscal and economic challenges ahead of Finance Minister Rachel Reeves’ budget on November 26, with borrowing costs at multi-decade highs and limited tax flexibility forcing her to seek new revenue sources to close an estimated £20 billion deficit. The services sector offered a rare boost, with August PMI rising to 54.2, its strongest in over a year, though gilt yields surged further to 5.75% and sterling weakened on concerns tax hikes could weigh on growth. The Defence Ministry also faced scrutiny over an £850 million Afghan relocation scheme, while corporate updates were mixed—M&G saw record inflows despite profit misses, and Hilton Food shares slumped over 19% on seafood cost pressures—leaving investors focused on how the government balances fragile growth with fiscal discipline. 

Top Market Movers: Among top gainers on FTSE 100 index, Fresnillo PLC (LSE: FRES) witnessed a rise of 5.78% followed by Antofagasta PLC (LSE: ANTO) which gained around 3.57%. 

Commodity Update: The British pound and yen weakened on Wednesday amid renewed concerns over global government finances and political uncertainty in Japan. Precious metals traded mixed, with gold rising 0.15% to $3,597.40, while silver slipped 0.06% to $41.57 and copper eased 0.13% to $9,980.30. Brent crude edged down 0.01% to $69.13, though it maintained sanctions-driven gains as traders awaited the upcoming OPEC+ meeting this weekend for fresh supply cues. 

Our Stance: Global markets showed a mix of restructuring, trade strain, and shifting policy expectations. Kraft Heinz’s breakup into two units underscores a trend where simpler, focused businesses are seen as better value creators. Europe’s €655 bn chemical sector remains under pressure from U.S. tariffs and high costs, forcing site closures and job cuts. In the U.S., Alphabet jumped 5.8% after a favorable antitrust ruling, lifting tech sentiment, though labor market data remained the key focus. Long-dated bonds sold off globally, pushing Japan’s 30-year yields to record highs and gold to $3,546/oz as investors sought safe havens amid fiscal worries. Despite September seasonality, Barclays maintained a “buy-the-dip” view on equities, citing Fed rate-cut prospects and improving growth, while oil slipped to $68.18/bbl as OPEC+ weighed unwinding supply cuts earlier than planned. 

FTSE 100 

The FTSE 100 is currently trading at 9,139.36, up 0.25%, holding above the key 8,900 support and its 50-day SMA of 9,048.80. However, it remains below the 21-day SMA of 9,186.01, indicating waning momentum. The RSI at 48.62 shows neutral sentiment as the index consolidates. Immediate support lies at 8,950, with a breakdown likely to trigger further downside. On the upside, resistance is placed near 9,500, and a breakout above this level could pave the way toward 9,800. 

Source - EODHD/Others