FTSE eases from record highs as commodities weigh

​​​FTSE pulls back from records

​The FTSE 100 fell about 0.2% in early trade, pulling back from record levels reached earlier this week. The retreat was hardly dramatic, but it does highlight the challenge facing the index at these elevated levels.

​Losses in miners and oil stocks provided the main drag. When commodity-heavy sectors stumble, the FTSE tends to follow given its significant weighting towards these areas. The index has enjoyed a strong run but needs fresh catalysts to push higher.

United Kingdom (​UK) government bonds edged lower in early trade, while sterling firmed towards $1.34 as the United States (US) dollar softened across the board. The pound's strength reflects relative economic resilience, though concerns over data quality continue to simmer beneath the surface.

​China rules hit commodity stocks

Copper fell more than 2% after China tightened rules on high-frequency trading, dragging lower miners including Rio Tinto, Glencore and Antofagasta. The move caught markets off guard, sending ripples through the mining sector that few had anticipated.

​The Chinese authorities' decision to clamp down on algorithmic trading reflects growing concerns about market stability. For commodity traders, it represents another regulatory hurdle in an already complex trading environment. These interventions rarely help sentiment in the short term.

​Genus defies market weakness

​Genus shares rose as much as 15% after the company said first-half and full-year profits would beat expectations. The animal genetics specialist benefited from strong demand in its pig breeding business, demonstrating that not all UK stocks are struggling.

​The profit upgrade provided a welcome boost to a market otherwise dominated by commodity-driven losses. Genus's performance shows that company-specific factors can still drive significant moves, even when broader market conditions prove challenging.

​Elsewhere, Bodycote agreed a US defence-focused acquisition, Ninety One reported higher assets under management, and Greencore completed its takeover of Bakkavor. These deals suggest corporate activity remains robust despite economic uncertainty.

​UK data concerns persist

​The Office for National Statistics is considering delaying the launch of its new labour market survey again. This adds to mounting concerns over the quality and timeliness of UK economic data, creating headaches for policymakers and market participants alike.

​Poor data quality makes it harder for the Bank of England (BoE) to assess economic conditions accurately. When you can't trust the numbers, policy decisions become more fraught. This uncertainty tends to weigh on sterling and UK assets more broadly.

​The data problems aren't new, but they're becoming increasingly difficult to ignore. Markets need reliable information to price assets effectively. Without it, mispricing becomes more likely and confidence suffers.

​Yen firms on intervention talk

​The Japanese yen firmed modestly after Japan's finance minister said Tokyo would not rule out intervention, including coordination with Washington. The currency remains close to 160 per US dollar after falling to an 18-month low, but intervention talk has at least paused the decline.

​Reuters reported that some Bank of Japan (BoJ) policymakers see scope to raise rates sooner than expected, possibly as early as April. This shift in expectations helped lift the yen, though political uncertainty around a potential snap election continues to create headwinds.

​AI trade lifts Asian markets

​Asian equities advanced as the artificial intelligence (AI) theme regained momentum following strong results from Taiwan Semiconductor Manufacturing Co (TSMC). The chip manufacturer's performance pushed MSCI Asia ex-Japan to a record and lifted tech-heavy indices in Taiwan and South Korea to all-time highs.

​The AI trade's revival demonstrates that this theme still has legs despite occasional wobbles. Corporate earnings are backing up the optimism, at least for now. That's what markets need to sustain rallies rather than just hype and hope.

​Wall Street closed higher overnight led by banks and chipmakers, while European futures edged lower after record highs. Investors are balancing AI optimism against tighter financial conditions, creating a push-pull dynamic that's likely to persist.

​Dollar strength trims Fed cut bets

​The dollar held near a six-week high as upbeat US data saw markets trim rate cut expectations. There's now a 67% probability of no Federal Reserve (Fed) move in April and a 37.5% chance of rates staying unchanged in June as well.

​Stronger economic data removes the urgency for Fed easing. Markets had been pricing in cuts rather optimistically, and reality is now catching up. This recalibration tends to support the dollar whilst weighing on risk assets.

​Gold and silver paused their rally after President Trump adopted a wait-and-see stance on unrest in Iran. The precious metals had been benefiting from safe-haven flows, but reduced geopolitical tensions took some of the urgency out of those bids.

​Oil prices extended sharp declines as supply disruption fears eased. The swift reversal in oil demonstrates how quickly sentiment can shift when geopolitical risks recede. Traders who chased the rally higher are now nursing losses.