FTSE 100 advances and outperforms European peers

Independent

01-07-2025

London's FTSE 100 ended an up and down trading session firmly in the green on Tuesday despite ongoing US trade policy uncertainty and mixed economic data.
The FTSE 100 index closed up 24.37 points, 0.3%, at 8,785.33. The FTSE 250 was 116.90 points higher, 0.5%, at 21,743.16, while the Aim All-Share added 2.29 points, 0.3%, at 772.94.
In European equities on Tuesday, the CAC 40 in Paris ended flat, while the DAX 40 in Frankfurt declined 1.0%.
Eurozone consumer price inflation accelerated in June, on robust service prices and a lesser decline in energy prices, numbers showed.
According to a Eurostat estimate, the pace of consumer price inflation in the single currency area accelerated to 2.0% last month, from 1.9% in May. The reading was in line with the FXStreet-cited consensus.
The European Central Bank has a 2% inflation target.
Consumer prices rose 0.3% in June from May. They had been flat in May from April.
ING said: 'The slight increase in inflation in June is not going to cause much excitement for anyone. It's strange to say in a global economy experiencing huge uncertainty, but eurozone inflation has become delightfully dull again.'
In New York, markets were mixed. The Dow Jones Industrial Average was up 0.9%, the S&P 500 was 0.2% lower and the Nasdaq Composite was down 0.9%.
The yield on the US 10-year Treasury was quoted at 4.26% narrowed from 4.27% on Monday. The yield on the US 30-year Treasury was quoted at 4.79%, slimmed from 4.82% on Monday.
The US manufacturing sector grappled with accelerating price pressure last month, a pair of surveys showed.
However, the surveys differed in their assessments of the strength in US manufacturing.
The S&P Global US manufacturing purchasing managers' index rose to 52.9 points in June, from 52.0 in May. The reading topped the flash result, which estimated another 52.0 PMI score.
The final reading suggests growth has picked up, as the PMI has risen further above the 50 point neutral mark.
'However, tariffs remained a prevalent theme, notably affecting purchasing decisions and prices,' S&P said.
By the Institute for Supply Management survey measure, the manufacturing sector remained in decline, though it edged closer to growth.
The PMI rose to 49 points in June, still below the no change mark, from 48.5 in May.
'In June, US manufacturing activity slowed its rate of contraction, with improvements in inventories and production the biggest factors,' ISM analyst Susan Spence commented.
The ISM prices index remained in expansion territory, rising to 69.7 points in June from 69.4 in May.
'A rebound in production and a slower drawdown in inventories resulted in a more modest pace of contraction for ISM manufacturing in June. But worries about tariffs continue to crimp supply, leaving manufacturers fraught with trade-offs for holding inventory as pricing pressure builds,' said Wells Fargo.
Separate data showed US job openings unexpectedly rose in May to the highest level since November.
According to Bureau of Labour Statistics data, available positions increased to 7.77 million from a revised 7.40 million reading in April, confounding FXStreet consensus which predicted a drop to 7.3 million.
Sam Tombs at Pantheon Macroeconomics said the jump in total job postings is 'irreconcilable' with a broad range of other evidence showing waning appetite among businesses to hire more workers.
He thinks the outlook likely remains for slowing growth in both wages and payrolls in the second half of this year.
The pound was quoted slightly higher at 1.3705 dollars at the time of the London equities close on Tuesday, compared to 1.3701 dollars on Monday. The euro stood at 1.1770 dollars, higher against 1.1747 dollars. Against the yen, the dollar was trading lower at 143.62 yen compared to 144.31 yen.
US President Donald Trump's top trade officials are scaling back their ambitions for comprehensive reciprocal deals with foreign countries, seeking narrower agreements to avert the looming reimposition of US tariffs, the Financial Times reported.
The narrower, piecemeal plan for new deals marks a retreat from the White House's vow to strike 90 trade deals during the 90-day pause in the sweeping reciprocal tariffs the president announced on April 2, the FT added.
Mr Trump suggested on his Truth Social account that Japan would be sent a new tariff rate, despite weeks of trade negotiations between them.
'To show people how spoiled Countries have become with respect to the United States of America, and I have great respect for Japan, they won't take our RICE, and yet they have a massive rice shortage,' Mr Trump wrote.
'In other words, we'll just be sending them a letter, and we love having them as a Trading Partner for many years to come.'
Kathleen Brooks at XRB said: 'Donald Trump threatened to increase tariffs saying that Japan remained unwilling to accept US rice exports. This is a sign that the US president is willing to play hardball with trading partners, even though we are days away from the 9th July deadline to reach agreements. So far, there are no signs that Japan will cave in to the US demands.'
Elsewhere, leading central bankers spoke at the European Central Bank's conference in Sintra, broadly restating well-rehearsed playbooks.
Bank of England Governor Andrew Bailey reiterated his view that the direction of UK interest rates will likely continue to be downwards, while ECB president Christine Lagardere repeated her mantra of data dependency.
For his part, Federal Reserve chairman Jerome Powell kept his options open.
'I wouldn't take any meeting off the table or put it directly on the table,' he said when asked about the prospects of a July rate cut.
On the FTSE 100, Sainsbury fell 1.1% despite strong first quarter sales figures, although this wasn't enough for the grocer to raise guidance.
Retail sales, excluding fuel, grew by 4.9% year-on-year in the 16 weeks to June 21 ahead of company-compiled consensus of 3.6% annual growth.
Excluding fuel, like-for-like sales rose 4.7% year-on-year versus consensus of 3.4%.
Dan Coatsworth at AJ Bell said: 'After years of being too expensive for lower-income households and not posh enough to woo wealthier individuals from Waitrose, it's clear Sainsbury's has finally found its groove. Its latest trading update shows a business in fine health, with robust sales growth across the board.'
Elsewhere, Kitwave plunged 22% as it warned lower sales and higher employment costs would mean lower than expected profit in the coming financial year.
The North Shields, England-based food wholesaler said volatility in the macroeconomic backdrop has caused a 'more pronounced fragility' in consumer confidence hitting volumes in the leisure sector.
Elsewhere, Mpac Group slumped 28% as it warned full-year revenue will fall significantly below previous expectations due to slower market conditions in the US.
The Tadcaster, North Yorkshire-based high-speed packaging and automation solutions firm said original equipment order intake in its core business slowed materially through the second quarter, as customers responded to growing uncertainty around tariffs and low consumer confidence by deferring capital investments and cutting back on spending.
Brent oil was quoted higher at 66.97 dollars a barrel late on Tuesday afternoon in London from 66.42 dollars late Monday. Gold fetched 3,341.97 dollars an ounce, higher against 3,286.04 dollars.
The biggest risers on the FTSE 100 were Diageo, up 68.5p, at 1,896.5p, Whitbread, up 95.0p at 2,918.0p, JD Sports Fashion, up 2.56p at 91.3p, Endeavour Mining, up 64.0p at 2,292.0p, and AstraZeneca, up 282.0p at 10,402.0p.
The biggest fallers on the FTSE 100 were ConvaTec, down 16.4p at 272.0p, Rolls-Royce, down 28.0p at 939.6p, Babcock International, down 29.0p at 1,119.0p, Barclays, down 7.6p at 329.7p and Standard Chartered, down 25.0p at 1,182.0p.
Wednesday's economic calendar has eurozone unemployment figures and ADP private payrolls figures in the US.
On the UK corporate front, Topps Tiles is due to release a trading statement.