18th Jun 2025 07:48
(Alliance News) - UK stocks were called to open higher on Wednesday, as the Israel-Iran conflict continues with US President Donald Trump demanding Tehran's "unconditional surrender".
"Mounting tensions between Israel and Iran, alongside Donald Trump's early departure from the G7 meeting, spurred concerns that the US could become involved in the Middle East crisis," commented Swissquote analyst Ipek Ozkardeskaya. "Investors are taking risk off the table, bracing for further escalation and a potential prolongation of tensions with Iran.
"China is on edge, as it buys oil from Iran, while Russia is uneasy about seeing one of its last key allies under growing threat. Israel, for its part, wants to eliminate the nuclear threat, and the US appears to be warming to the idea of regime change in Iran."
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 7.8 points, 0.1%, at 8,826.23
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Hang Seng: down 1.2% at 23,698.78
Nikkei 225: up 0.8% at 38,838.57
S&P/ASX 200: down 0.2% at 8,528.20
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DJIA: closed down 299.29 points, 0.7%, at 42,215.80
S&P 500: closed down 0.8% at 5,982.72
Nasdaq Composite: closed down 0.9% at 19,521.09
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US 10-year Treasury yield: 4.41% (4.42%)
US 30-year Treasury yield: 4.92% (4.93%)
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EUR: lower at USD1.1507 (USD1.1522)
GBP: lower at USD1.3453 (USD1.3502)
USD: lower at JPY144.98 (JPY145.07)
GOLD: higher at USD3,386.38 per ounce (USD3,381.51)
OIL (Brent): higher at USD76.46 a barrel (USD75.45)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
10:00 CEST eurozone current account
11:00 CEST eurozone CPI
10:00 SAST South Africa CPI
13:30 BST US building permits
15:30 BST US EIA crude oil stocks
17:00 BST US EIA natural gas stocks
19:00 BST US interest rate decision
19:30 BST US Fed press conference
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UK consumer price inflation data was in line with consensus for May, except for the core index, the Office for National Statistics reported. Consumer prices rose 0.2% on a monthly basis in May, slowing from 1.2% in April and in line with FXStreet-cited consensus. Annually, CPI came in at 3.4% against 3.5% on-year growth for April, also in line with consensus. The core consumer price index posted 3.5% on an annual basis, against the prior month's 3.8% growth and slightly below consensus which pencilled in 3.6% growth. Earlier in June the ONS reported that the UK's headline inflation figure was 0.1 percentage points too high for April due to an error in the vehicle tax data collected. The retail price index for May posted 0.2% on-month growth, against April's 1.7% rise. Annual growth was 4.3%, in line with consensus and slowing from 4.5% inflation.
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The UK economy is set to grow at a slower rate than previously predicted, according to new forecasts. Rising costs are set to cause "weak" business investment and weigh on the government's ambitions to accelerate growth in the UK economy, the Confederation of British Industry said. The influential trade body's latest economic forecast indicated that the UK economy is on track to grow by 1.2% this year. It had previously predicted a rise of 1.6%. It also downgraded its growth forecast for 2026 to 1% from 1.5% for the year.
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The UK government's flagship reforms to the welfare system are expected to have their first outing in Parliament on Wednesday. The Welfare Reform Bill will be introduced in the House of Commons, and its text will be published so MPs can begin scrutiny of the proposals. The major reforms are set to include the tightening of criteria for the main disability benefit in England, personal independence payment, Pip. Ministers also want to cut the sickness related element of universal credit, UC, and delay access to it, so only those aged 22 and over can claim it. The package of reforms is aimed at encouraging more people off sickness benefits and into work, and the government hopes it can save up to GBP5 billion a year by doing so. But ministers are likely to face a Commons stand-off with backbench Labour MPs over their plans, with dozens of them last month saying the proposals were "impossible to support".
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A new UK government-backed "housing bank" is being established to boost the construction of homes. The National Housing Bank, a subsidiary of Homes England, will be publicly owned and act as a consistent partner to the private sector, bringing stability and certainty to housing developers and investors, the government said. It will be designated as a public financial institution and will work with mayors and local leaders to back housing projects meeting regional priorities. The bank will deploy some of the GBP2.5 billion in low-interest loans announced at the spending review to support the building of social and affordable homes. It will be backed with GBP16 billion of financial capacity, on top of GBP6 billion of existing finance to be allocated this Parliament, the government said. It said the additional public investment could help build more than 500,000 new homes.
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G7 leaders on Tuesday vowed greater support for Ukraine, at a summit missing Donald Trump. The US president had been due to speak at the G7 summit with his Ukrainian counterpart Volodymyr Zelensky, but flew back Monday over the Israel-Iran conflict. Zelensky met the remaining leaders hours after Russia hit Kyiv with one of the worst bombardments since it invaded in February 2022. Canadian Prime Minister Mark Carney welcomed Zelensky and announced CAD2 billion, USD1.47 billion, of military support, including drones and helicopters, for Ukraine. But the G7 summit stopped short of issuing a joint statement, unlike in past years under Trump's predecessor Joe Biden when the club of major industrial democracies denounced Russian "aggression." A Canadian official, backtracking on an earlier account of the US trying to water down a proposed statement, said there was never an attempt to issue one due to Trump's continued hopes of mediating with Russian President Vladimir Putin. "It was clear that it would not have been feasible to find detailed language that all G7 partners could agree to in that context," the official said on condition of anonymity.
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China's central bank chief warned that the global monetary system could be "weaponised" and politicised by dominant countries, as the country navigates an uneasy trade truce with the US. The superpowers said this month they had made progress on points of contention including Beijing's exports of rare earths and visas for Chinese students in the US, following marathon talks in London. But People's Bank of China chief Pan Gongsheng on Wednesday hit out indirectly at US dominance of international finance infrastructure. "When the country with the dominant currency's self-interest contradicts with the global public good, that country will consider its self-interest more," Pan told a forum in Shanghai. The dollar is traditionally considered a safe haven in times of crisis or conflict, but the uncertainty created by US President Donald Trump's sweeping tariffs on virtually all trading partners – most of which were subsequently paused temporarily – have upended global norms. Pan added that "traditional cross-border payments infrastructure is easy to politicise, weaponise, and use for unilateral sanctions".
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BROKER RATING CHANGES
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Deutsche Bank Research raises Entain price target to 1,122 (958) pence - 'buy'
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Deutsche Bank Research raises Morgan Sindall price target to 4,600 (4,000) pence - 'buy'
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Goldman Sachs starts Ferguson Enterprises with 'buy' - price target 280 USD
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COMPANIES - FTSE 250
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AO World released its results for the year ended March 31, with group revenue rising 9% on-year to GBP1.14 billion. Adjusted pretax profit climbed 27% to GBP44 million from GBP34 million. Founder & Chief Executive John Roberts says: "Our 25th year in business has been our best yet." Statutory pretax profit however fell 40% to GBP21 million from GBP34 million. The adjusted figures are adjusted for fees related to the musicMagpie acquisition and an impairment charge relating to the Mobile cash generating unit, the company says. Basic earnings per share fell 60% to 1.70 pence. AO World noted that revenue for its core B2C Retail business rose 12% to GBP832 million, "in line with our expectation of delivering double-digit growth". "As planned, adjusted profits on a like-for-like [LFL1] basis grew faster than revenues at 32% despite macroeconomic headwinds, with LFL adjusted profit before tax above the top end of our previously upgraded range of GBP39 to GBP44 million [at GBP45 million]," AO World noted. Looking ahead, AO World said it has "a number of initiatives in the pipeline which we expect to give customers more opportunities to buy from us, and more reasons to keep coming back to us". It added: "Despite the wider macroeconomic challenges, particularly employment cost increases, our objectives remain unchanged and we are confident in our ability to continue to grow revenue, alongside group adjusted pretax profit of GBP40 million to GBP50 million."
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OTHER COMPANIES
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Ajax Resources starts its first day of trading on the Aquis Stock Exchange on Wednesday morning, after cancelling trading on the Main Market of London Stock Exchange. This follows its "successful" fundraise announced on Tuesday, which brought in proceeds of GBP1.0 million. The company said it has agreed to settle invoices for a total of GBP23,940 from two service providers through issuing 598,500 new shares at 4p each.
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MP Evans announced its decision to commence a new share buyback programme, with immediate effect. "The programme will have a budget of up to GBP12 million [in aggregate], with up to GBP2 million to be used to buy back M.P. Evans' shares...in the market over the course of the period from the date of this announcement until [September 17]," the company said. "The balance of GBP10 million may be used during the same time period in more limited circumstances, including in the event that any more material shareholdings of shares are offered for sale." The company said its business and assets are currently undervalued, but that its "robust balance sheet continues to provide an opportunity to repurchase shares at advantageous levels".
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By Emma Curzon, Alliance News reporter
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