UK Retail Sales Declined By 0.3% in December:

Image Source : Krish Capital Pty Ltd

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went up around 1.19% on 17 January 2025. Basic Materials, Industrials & Energy sector has witnessed a substantial growth.  

Macro Update:  British retail sales unexpectedly declined by 0.3% in December, following a revised 0.1% growth in November, according to data from the Office for National Statistics, raising concerns of an economic contraction in the fourth quarter. This adds to the challenges faced by finance minister Rachel Reeves, who has been under pressure after introducing higher social security contributions for employers, which businesses warn could further slow economic growth. Despite criticism, Reeves remains committed to making tough decisions to stimulate the economy. Meanwhile, the Bank of England announced a delay in implementing stricter bank capital requirements, now set to take effect in January 2027, in response to global opposition to the Basel standards. Separately, Glencore’s brief discussions with Rio Tinto regarding a potential merger of their copper production businesses ended without any significant progress. 

Top Market Movers: Among top gainers on FTSE 100 index, Smiths Group PLC (LSE: SMIN) witnessed a rise of 5.38% followed by Entain PLC (LSE: ENT) which gained around 4.16%. 

Commodity Update: The Japanese yen is set for its best weekly performance in over a month, as market expectations rise that the Bank of Japan will raise interest rates next week. Positive data, including strong wage growth and persistent price pressure, have fueled this outlook, with traders assigning an 80% probability of a rate hike. Meanwhile, in commodities, gold dipped 0.13% to $2,747.30, silver fell 0.34% to $31.61, and copper rose 0.30% to $9,274.50. Brent crude climbed 0.20% to $81.42 per barrel, extending its weekly gains due to supply concerns from U.S. sanctions on Russian oil producers and potential Fed rate cuts. 

Our Stance: Global financial markets showed mixed trends this week, shaped by easing bond yields, positive economic data, and evolving monetary policy expectations. European shares advanced broadly, with the STOXX 600 poised for its fourth consecutive weekly gain, while better-than-expected economic data in China buoyed Chinese and Hong Kong stocks. In the U.S., equity markets dipped on Thursday after a strong rally earlier in the week, as investors balanced solid corporate earnings and inflation data against Federal Reserve rate cut prospects. Oil prices edged higher, marking a fourth straight week of gains amid concerns over U.S. sanctions on Russian energy. Meanwhile, U.S. Treasury yields fell following comments from Federal Reserve Governor Christopher Waller, who signaled the possibility of multiple rate cuts this year, fueling expectations for policy easing at the Fed's June meeting. Overall, market sentiment remains cautious but supported by strong economic and earnings data. 

FTSE 100 

The FTSE 100 closed at 8,391.90 on Thursday, up 1.09%, forming a bullish candlestick pattern with solid support at 8,002.00. The index is positioned above its 21-period Simple Moving Average (SMA), indicating potential for short-term upward momentum. Additionally, the 50-period SMA provides further support, boosting the likelihood of continued gains. The Relative Strength Index (RSI) stands at 63.26, signaling sustained bullish sentiment in the market. These technical indicators suggest that the FTSE 100 may continue its upward trajectory if it maintains support levels and remains above the key moving averages in the near term. On the weekly chart, the FTSE 100 rose 0.30%, staying above the 50-period SMA at 8,130.76. Key support lies at 7,932, with resistance at 8,400. A breakout above 8,450 could signal stronger bullish momentum, while a drop below 8,020 may indicate further downside. Monitoring these levels is essential for predicting future price movements. 

Data Source - EODHD/Others