In London this week, Prime Minister Andy Burnham was tackling with narratives from energy coming up this winter with Brent crude oil at $117 a barrel, diesel prices through the roof, and a winter that could be unpredictable with extreme weather. After the hottest summer on record, certain households in the UK are set to receive a £150 energy payment relief from the government to offset energy inflation.
These energy payments are for those in society who are most at need, such as the elderly. However, one could also raise the question that government intervention causes further inflation and that economies need to truly suffer to bring down inflation.
The Prime Minister is still in a difficult position geopolitically, juggling the escalations in the Middle East and tensions with Russian President Vladimir Putin over supporting Ukraine. This comes as Donald Trump is doing an energy deal with Putin to offset Iran war energy inflation.
At the same time, President Donald Trump is dismissing Zelenskey's position and Elon Musk is turning off Starshield, the military part of Starlink. Musk stated he does not have control over that part of Starlink business; it is the US government.
This all leaves Prime Minister Andy Burnham in a difficult position as he is in the middle between the US and their war in the Middle East to the national sovereignty of Ukraine, which a lot of UK citizens support. Also, the Prime Minister is in a difficult situation on Ukraine with his European allies in NATO.
UK Budget and Energy Relief Plans
FISCAL & BUDGET PREPARATIONS
Upcoming Budget Strategy: The Treasury is finalizing plans for the upcoming Budget, with Chancellor John Healey signaling a target to cut £800M in regulatory red tape for businesses.
Fiscal Pressure: Geopolitical friction and elevated interest rate expectations continue to squeeze the government’s fiscal headroom. Options under discussion include targeted bank tax adjustments and temporary consumer relief packages to cushion against projected early-year energy cap increases.
DOMESTIC & RESILIENCE POLICY
Emergency Preparedness Campaign: Following extreme weather from Storm Austen, Prime Minister Andy Burnham warned of a potential "winter of greater flooding".
Public Readiness Guidance: Ministers faced pushback from opposition figures regarding government communications encouraging households to maintain three days of essential emergency supplies.
FOREIGN AFFAIRS & DIPLOMACY
US & Middle East Security: PM Andy Burnham held bilateral discussions with US President Donald Trump, touching on middle-eastern security, freedom of navigation, and diplomatic efforts regarding Ukraine and international energy projects.
Global Engagement: Downing Street reaffirmed full adherence to UK commitments within NATO while maintaining bilateral engagements with regional and Latin American trade partners.
Global Market Performance and Commodities
The FTSE 100 large cap, the UK's biggest companies, although more of a reflection of a global economy than domestic, saw some selling this week. Along with the FTSE 250 mid cap, which is seen as more of a reflection of the UK domestic economy, it was also down on the week.
FTSE 100
Weekly Performance: Closed the week down -0.32% at 10,690.36.
Key Drivers: Surging Brent crude prices provided support to major commodity and energy heavyweights like Shell and BP. However, this gain was offset by a spillover sell-off from US tech markets and weaker-than-expected UK retail sales figures late in the week.
FTSE 250
Weekly Performance: Ended the week down -0.81% at 24,237.39.
Key Drivers: Mid-caps experienced broader selling pressure as domestic economic uncertainty, rising gilt yields, and corporate earnings profit warnings weighed heavily on consumer discretionary, retail, and industrial software stocks.
The Great British pound GBP/USD was slightly up this week from dollar weakness. In commodities this week, we saw Brent crude oil hit $117, which is really concerning for the overall economy and the near-term inflation data prints for global economies, then following central bank policies.
WTI West Texas Intermediate is trading at $104 a barrel. In precious metals, we saw gold sell off to find support at $4,000 an oz, while silver sold off to trade back around $50 an oz as we have been discussing here every week as a possible scenario.
But it's okay touching the price; we are yet to see silver hold back at this price in a range that is based on fundamentals and not on speculation and hype. Stock markets this week saw US equities have lots of volatility but ended the week little changed, but pointing to the downside for both the S&P 500 US 500 CFD and the NASDAQ US Tech 100 CFD (contract for difference).
The German DAX stock index and the French CAC 40 stock index in Europe both saw continued pressure and ended the week down around 1.5% after major industries struggled in Europe such as luxury goods and automotive. In Asia, we had the Japanese Nikkei 225 major cap stock index sell off.
In the Korean KOSPI, we had massive volatility to end the week slightly up but little changed around 2% up. For the KOSPI stock index, that is not a great deal of movement in comparison to last week, which was around 14% down.
Currency and Cryptocurrency Trends
In global major currency pairs, there was not a massive amount of trading volume as the high-impact news catalyst events were mainly mega-cap company earnings reports, so more of a bottom-up stock story rather than economic data driving currency moves. DXY was slightly down for the week and major pairs such as the Euro saw some buying.
Also, it looks like some buying this week in Japanese Yen JPY/USD ahead of the possible interest rate hike from the Bank of Japan. Cryptocurrencies this week saw Bitcoin (BTC) trade back down to $80,000 per Bitcoin, but without a great deal of trading volume.
In blue-chip altcoins, Ethereum and XRP were the same story of a slight sell-off but with low trading volume.
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