UK Markets Trading in a range amidst the Mixed earnings

Image Souce: Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.26% on 25 October 2024. Utilities, Real Estate & Technology sector demonstrated a substantial decline. Moreover, sectors such as Energy & Basic Materials sector faced a significant growth.

Macro Update:  Thames Water, the UK’s largest water supplier, has secured a financial support plan of up to £3 billion to maintain operations amid concerns of a potential collapse. This financial arrangement now requires court approval. The government remains ready to step in if Thames Water, embroiled in controversies over river pollution, fails to stabilize financially. Meanwhile, London’s FTSE 100 index saw a modest rise of 0.13% on Thursday, largely fueled by positive corporate earnings and economic data hinting at potential Bank of England rate cuts. Notable gainers included Unilever, with a 2.9% increase after surpassing third-quarter sales expectations, and Barclays, which rose 4.1% following a stronger-than-expected 18% profit boost in the third quarter. The FTSE 250, focused on domestic businesses, fell slightly by 0.2%.

Top Market Movers: Among top gainers on FTSE 100 index, NatWest Group PLC (LSE: NWG) witnessed a rise of 3.46% followed by Schroders PLC (LSE: SDR) which gained around 0.96%.

Commodity Update: On Friday, the dollar pulled back from recent highs, aligning with a decline in U.S. Treasury yields. Despite this dip, the currency was set for another weekly gain, fueled by expectations of a slower Federal Reserve rate cut pace and growing speculation surrounding a potential second Trump presidency. In the commodities market, gold fell 0.28% to $2,741.20 per ounce, silver decreased 0.25% to $33.71, and copper was down 0.01% to $9,565.00 per ton. Meanwhile, Brent crude futures rose 0.6% to $74.83 amid ongoing tensions in the Middle East and upcoming Gaza ceasefire negotiations.

Our Stance: European bond yields remained steady, with Germany’s 10-year bond yield stable at 2.249% as investors awaited a German survey expected to indicate a slight improvement in business morale. Recently, weak eurozone business activity data had raised expectations of rate cuts from the ECB, keeping yields low. Meanwhile, Japan's Nikkei marked a second consecutive week of declines amid concerns that Japan's ruling party could lose its majority in upcoming elections, leading to market uncertainty and a potential shift in domestic policy.

FTSE 100

The FTSE index closed at 8,269.38, reflecting a modest gain of 0.13%. The formation of a bullish candlestick pattern, coupled with increased trading volume, suggests a slight uptick in investor confidence. Starting the day at 8,273.39, the index showed initial strength but has since been trading close to the key 21-period Simple Moving Average (SMA), currently acting as a resistance level. On the weekly chart, the 50-period SMA indicates a generally positive long-term outlook. The Relative Strength Index (RSI) is 47.80, signalling slightly bearish momentum. Recently, the index approached the critical 8,400 resistance level, and a successful breakout above this could further bolster market sentiment. Conversely, the 8,100 level remains a solid support. Given the index's tight trading range, any breakout could have a significant impact on the prevailing trend.