10th Jun 2025 07:53
(Alliance News) - London's FTSE 100 is called to open higher on Tuesday, clawing back Monday's weakness, in the wake of UK unemployment data and as eyes remain on US-China trade talks.
"Yesterday's talks ended without a resolution, but the parties intend to meet again in London at 10am British time today. Therefore, it is quite possible that a deal will be reached today that provides for the recent restrictions to be relaxed. It is also possible that US export restrictions introduced under the Biden administration will be withdrawn. This is likely to benefit the US dollar in the short term," Commerzbank analyst Volkmar Baur commented.
The UK unemployment rate rose slightly in the three months to April, as expected, while pay growth was more moderate than forecast, according to numbers on Tuesday.
The Office for National Statistics said the UK unemployment rate increased to 4.6% in the period from February to April, from 4.5% in the first three months of 2025. The last time the jobless rate was higher was in the period from April to June 2021, at 4.7%, according to the ONS.
The jobless rate was in line with FXStreet-cited consensus.
The ONS said annual growth in average earnings was 5.2% for regular earnings, which exclude bonuses, and 5.3% for total earnings, which factor in bonuses. However, regular earnings growth of 5.4% was expected, and total earnings growth of 5.5% was predicted, according to FXStreet.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 0.2% at 8,851.48
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Hang Seng: down 0.2% at 24,126.43
Nikkei 225: up 0.3% at 38,183.44
S&P/ASX 200: up 0.8% at 8,587.20
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DJIA: closed down 1.11 points at 42,761.76
S&P 500: closed up 0.1% at 6,005.88
Nasdaq Composite: closed up 0.3% at 19,591.24
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US 10-year Treasury yield: 4.47% (4.49%)
US 30-year Treasury yield: 4.94% (4.96%)
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EUR: lower at USD1.1409 (USD1.1419)
GBP: lower at USD1.3513 (USD1.3556)
USD: higher at JPY144.48 (JPY144.42)
GOLD: lower at USD3,327.99 per ounce (USD3,329.84)
OIL (Brent): higher at USD67.17 a barrel (USD66.88)
(changes since previous London equities close)
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ECONOMICS
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Tuesday's key economic events still to come:
13:55 BST US Redbook index
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The spending review is "settled", Downing Street has said, after the Home Office was the last department locked in budget negotiations. Chancellor Rachel Reeves is expected to announce funding increases for the NHS, schools and defence along with a number of infrastructure projects on Wednesday, as she shares out some GBP113 billion freed up by looser borrowing rules. But other areas could face cuts as she seeks to balance manifesto commitments with more recent pledges, such as a hike in defence spending, while meeting her fiscal rules that promise to match day-to-day spending with revenues. On Monday morning, Home Secretary Yvette Cooper was the last minister still to reach a deal with the Treasury, with reports suggesting greater police spending would mean a squeeze on other areas of her department's budget. Speaking to reporters on Monday afternoon, the Prime Minister's official spokesman said: "The spending review is settled, we will be focused on investing in Britain's renewal so that all working people are better off. "The first job of the government was to stabilise the British economy and the public finances, and now we move into a new chapter to deliver the promise and change."
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Nato secretary-general Mark Rutte has said he sees no discrepancy between the UK's current defence spending goals and his own push for members to reach 5% of GDP. The Nato chief would not reveal the deadline for when he hopes Nato allies will reach the target as he spoke at London's Chatham House. He said he had a "clear view" on when he thinks countries should get there but said he would keep it to himself. Countries that do not ramp up defence spending should "learn to speak Russian", he said. He had earlier commended the UK for plans unveiled in the strategic defence review last week as he met Keir Starmer at Downing Street on Monday. Rutte said the UK's goals to spend 2.5% on defence from April 2027 and then aim to get to 3% over the next parliament were not at odds with his own proposed target for the bloc. He has proposed members of the bloc spend 5% of gross domestic product on defence as part of a strengthened investment plan for the alliance. The target would require nations to raise core defence spending to 3.5% of GDP, while the remaining 1.5% is to be made up of "defence-related expenditure". He said every country is "working in cycles" and that he was "really impressed" with the UK's plans under the strategic defence review unveiled last week.
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UK retail sales edged up in May, but consumer caution continued to weigh on non-essential purchases, according to figures released Tuesday by the British Retail Consortium and KPMG. Total UK retail sales increased by 1.0% year-on-year in May, slightly ahead of the 0.7% rise in the same month last year. Growth was driven primarily by food sales, which rose 3.6%, supported by a run of bank holidays and seasonal events including football tournaments. However, non-food spending remained under pressure, falling 1.1% from a year earlier. In-store non-food sales declined by 0.9%, while online non-food sales slipped 1.5%, leaving online penetration flat at 36%. "Consumers put the brakes on spending, with the slowest growth in 2025 so far," said Helen Dickinson, chief executive of the BRC. "Fashion and full-price big-ticket items were held back by lower consumer confidence."
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Activity in Ireland's construction sector contracted in May despite growth in the commercial sub-sector, S&P Global reported. The AIB Ireland purchasing managers' index fell to 49.2 in May, down from 52.4 in April. A reading above the 50.0 neutral mark indicates growth in business activity from the previous month, while a reading below signals a contraction. The latest reading slipped into contraction for the first time since February, as signs of softening market conditions and growing uncertainty around US trade policy brought about a drop in overall activity. Despite declining activity, new orders increased for the fourth successive month, although the pace of growth hit a three-month low.
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BROKER RATING CHANGES
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JPMorgan raises Aberdeen Group to 'overweight' (neutral) - price target 214 (164) pence
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RBC cuts Marlowe to 'sector perform' (outperform) - price target 466 (450) pence
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COMPANIES - FTSE 250
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Frasers Group confirmed its interest in Revolution Beauty, and the Sports Direct owner said that any offer it makes for the cosmetics product retailer will be all cash. Frasers, however, said there is no certainty that a bid will be made. Revolution Beauty confirmed Monday that Sports Direct owner Frasers Group is one of a number of parties eyeing a bid for the company. It said Frasers is "one of a number of parties conducting due diligence" as part of the formal sale process announced in May.
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Bellway said it is on track for "strong growth in volume output and profits" in its financial year, and it predicted average selling prices will be above previous guidance. The housebuilder said it saw "robust" trading through the spring selling period. "Bellway has delivered a solid trading performance, and we are on track to deliver strong growth in volume output and profits in the full financial year. We have a healthy forward order book and outlet opening programme, which will serve as a platform for further growth in FY26," Chief Executive Jason Honeyman said. Volume output for the year to July 31 is now expected between 8,600 and 8,700 homes, a rise from 7,654 home in the prior financial year. In its March interim results, it predicted output of at least 8,500 homes. The overall average selling price is now expected to be around GBP315,000, up from its previous guidance of GBP310,000 and a rise from GBP307,909 last year. It put the guidance hike to "changes in product mix". "The group is now fully sold for the current financial year and if market conditions remain stable, Bellway remains well-positioned to deliver cumulative volume growth of 20% in the two years to 31 July 2026," it added.
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Oxford Instruments said it has sold its quantum-focused business for a total of GBP60 million in cash. It also added that annual results due for publication on Tuesday have been delayed. The provider of technology and services to industrial companies and scientific researchers said Oxford Instruments NanoScience, a unit which generated GBP59 million in revenue in its year to March 31, has been sold to Quantum Design International Inc. The business achieved an adjusted operating profit of GBP1 million in the year just ended, Oxford Instruments said. "Having returned the business to growth and profitability, this sale crystallises this value for shareholders," the company added. It will book non-recurring transaction-related costs of around GBP2 million to GBP3 million. "Following the sale, approximately GBP4 million of cost which is currently allocated to the NanoScience business will remain within the group. We expect to begin to mitigate this in FY2026/27," it added. "The divestment will better enable Oxford Instruments to focus on its remaining businesses, which have growth and margin characteristics that will ensure the group is better placed to deliver value for shareholders." The company said it plans to return up to GBP50 million to shareholders through a buyback, which kicks off shortly. Oxford Instruments said BDO needs more time to complete "its standard audit procedures", so annual results have been delayed. "The results will be announced at the earliest possible opportunity," it added. It affirmed that it "delivered a strong performance in line with market expectations".
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OTHER COMPANIES
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Filtronic, a maker of products for aerospace, defence, space and telecommunications industries, expects to top annual revenue expectations after penning a bumper deal with SpaceX. Filtronic announced the award of a follow-on order from the Elon Musk-founded space technology company. The irrevocable order, for the E-band Cerus 32 Solid State Power Amplifier, is worth USD32.5 million. It is the largest contract award to date with SpaceX, Filtronic said. "This award reflects the strength and continued success of Filtronic's Strategic Partnership with SpaceX, the leading Low Earth Orbit technology provider. Consequently, the board is now confident the company will exceed current revenue expectations for FY2026. Given the cadence of orders the company has received, Filtronic continues to invest in its technology roadmap, across a range of products, given the sizeable market opportunity," the company added. Filtronic's financial year runs to the end of May.
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Fire safety products supplier Zenova hailed a "proud moment" after winning an order with the All England Tennis & Croquet Club, where the Wimbledon Championships are held. Zenova will supply its FX 6L extinguisher to SRHSE, the fire health and safety consultant to Wimbledon. "Zenova extinguishers will be deployed across the Wimbledon grounds, particularly in the welfare areas where staff over multiple shifts work in support of food and beverage functions, in security sections, as well as in baggage handling. The single FX series is ideal therefore to cover any of the possible fire-related incidents that are likely to occur over such a diverse collection of work areas," Zenova said. CEO Thomas Melchior added: "Becoming an integral part of the safety planning for one of Britain's premier events of the season, is a significant endorsement of the efficacy and versatility of our EN-3 certified FX extinguishers to meet the client's safety demands across all potential fire hazards. The demand for our range of extinguishers continues to grow as we penetrate more markets, and awareness increases of our products. This proud moment in the group's development is shared by the entire Zenova team."
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Ryanair said it will buy 30 new spare LEAP-1B engines, forking out USD500 million. The engines will be delivered over the next two years. The "fuel-efficient" offerings have a list price of USD500 million, the budget carrier said. "These 30 new engines greatly increase Ryanair's pool of spare engines to over 120, which will enhance Ryanair's operational resilience," Ryanair added. "Ryanair plans to increase its fleet to 800x B737s (all powered by CFM engines) to grow its traffic to 300 million guests per annum by 2034."
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By Eric Cunha, Alliance News news editor
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