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Fawad Razaqzada, StoneX Market Analyst, discusses recent global trade developments, UK economic data, and the FTSE 100’s technical outlook.
The extension of the pause on higher US tariffs on Chinese goods until November 10 provides markets with relief by preventing an immediate tariff increase to 54%. This truce offers more time for negotiations between the world’s largest economies and has contributed to recent market rallies globally, including the FTSE 100. Razaqzada believes that the easing of trade tensions combined with gradual interest rate cuts by central banks has helped fuel investor confidence.
The Bank of England’s recent rate cut was a narrow decision amid divided policymakers, leaning hawkish, which lowers the chance of another cut in November. Razaqzada notes that UK data shows average earnings grew 4.6% year-on-year in the latest quarter, down from 5%, and employment has declined eight times in nine months, though the most recent job loss was the smallest. He believes that this points to a potential stabilisation in the labour market that could reduce wage inflation pressures.
Despite the tariff truce, inflation concerns remain. Many economists warn that Trump’s tariffs could ultimately raise consumer prices, squeezing purchasing power. This may force central banks to maintain higher interest rates for longer, which risks reducing consumer spending, hurting corporate profits, and negatively affecting share prices.
The FTSE 100 is currently consolidating near its record high of 9,191, easing overbought short-term indicators, which is a positive sign. It remains above key moving averages and has broken through multiple resistance levels, suggesting an upward trend. Traders are advised to focus on dip-buying opportunities with key support levels at 9,135, 9,100, and 9,050, while resistance sits at 9,175 and the all-time high of 9,191.
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---- Written by Gus Farrow
---- Expert: Fawad Razaqzada, StoneX Market Analyst
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Payrolls and CPI arrive back to back, giving the U.S. dollar index a two-step test of Federal Reserve rate hike expectations. Labor data sets the first read, and the inflation update tests how well that read holds.
Eurozone headline inflation is climbing while core inflation holds steady, keeping concern about rising prices alive. Yet the euro is recovering against the dollar mainly because the U.S. dollar is weakening, not because of the inflation data.
The British pound is drawing buying interest into the Bank of England decision while the U.S. dollar trades unevenly across the majors. That bid gives sterling its own driver and sets it apart from a euro that has stalled near resistance.
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