3rd Jun 2025 07:50
(Alliance News) - Stocks were called to open higher on Tuesday, following claims that trade talks between US President Donald Trump and Chinese President Xi Jinping are imminent.
"Some in the Trump Admin have noted that such a call may come this week, though I certainly shan't be holding my breath on that front," commented Pepperstone's Michael Brown. "Still, given recent performance, all this punchy rhetoric is probably going to end up as another example of the 'TACO' vibe with which we've all become so familiar. Or, perhaps more diplomatically, an 'escalate to de-escalate' strategy."
He continued: "Every tariff threat takes another chunk out of the US' institutional credibility, and provides international investors with further reason to trim US exposures. In contrast, the inevitable unwinding of those threats provides a crumb of comfort and certainty, which sees those US exposures increased once more.
"It seems, frustratingly, that we'll just yo-yo between those two dynamics for the foreseeable future."
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called up 9.0 points, 0.1%, at 8,783.26
----------
Hang Seng: up 1.4% at 23,480.37
Nikkei 225: up 0.1% at 37,497.31
S&P/ASX 200: up 0.6% at 8,466.70
----------
DJIA: closed up 35.41 points, 0.1%, at 42,305.48
S&P 500: closed up 0.4% at 5,935.94
Nasdaq Composite: closed up 0.7% at 19,242.61
----------
US 10-year Treasury yield: 4.42% (4.46%)
US 30-year Treasury yield: 4.94% (5.00%)
----------
EUR: lower at USD1.1425 (USD1.1429)
GBP: lower at USD1.3529 (USD1.3546)
USD: higher at JPY142.95 (JPY142.75)
GOLD: lower at USD3,359.53 per ounce (USD3,371.47)
OIL (Brent): higher at USD64.71 a barrel (USD64.58)
(changes since previous London equities close)
----------
ECONOMICS
----------
Tuesday's key economic events still to come:
11:00 CEST eurozone unemployment
11:00 CEST eurozone CPI
16:20 CEST Germany Deutsche Bundesbank executive board member Fritzi Kohler-Geib speaks
11:30 SAST South Africa GDP
08:55 EDT US Redbook index
10:00 EDT US factory orders
US total vehicle sales
13:00 EDT US Federal Reserve Governor Lisa Cook speaks
----------
UK Trade Secretary Jonathan Reynolds is set to meet US officials on Tuesday as the UK aims to set a timeline for its exemption from President Donald Trump's tariffs. Keir Starmer and Trump announced the broad terms of an agreement last month that would exempt the UK from some of the US president's tariffs on steel and cars while increasing market access for other goods. The UK prime minister hailed the announcement as a major achievement, saying the UK was the first nation to reach such an agreement with Trump. But the details are still being worked out ahead of a formal deal, and the government hopes for an agreement within weeks. Reynolds is expected to discuss implementing the deal during talks with US trade representative Jamieson Greer in Paris on Tuesday, where he is attending a meeting of the OECD. That meeting comes amid uncertainty about the future of Trump's tariffs after a US court last week ruled many of them unlawful, before an appeals court reinstated the levies pending a further hearing.
----------
Military drones and lasers will receive a GBP5 billion investment as the UK government bids to put "the kit of the future into the hands of frontline troops". The funding, announced by Defence Secretary John Healey, includes GBP4 billion for drones and autonomous systems, and an extra GBP1 billion for lasers to protect British ships and soldiers. It follows the publication of the Strategic Defence Review on Monday that recommended a greater focus on new technology, including artificial intelligence and drones, as an "immediate priority". Healey said the investment would provide "the most significant advance in UK defence technology in decades" and "ensure our armed forces have the cutting-edge capabilities they need to meet the challenges of a rapidly changing world". He added: "We are delivering the Strategic Defence Review's vision to put the UK at the leading edge of innovation in Nato, by backing British industry and fast-tracking the kit of the future into the hands of frontline troops." Part of the investment will see the establishment of a new "drone centre" to accelerate the deployment of the technology by all three branches of the armed forces. The focus on drones comes as the technology has proven increasingly lethal on the battlefield in Ukraine, where it now kills more people than traditional artillery.
----------
The water sector in England and Wales needs a "fundamental reset" after being plagued with "deep-rooted, systemic" failures, according to a new report. In an interim report published on Tuesday, the Independent Water Commission calls for a "fundamental strengthening and rebalancing" of Ofwat's regulatory role, calling for the watchdog to adopt a more supervisory approach to its oversight of water firms. This could include benchmarking companies against one another to justify customer bills and assess efficiency. It also urges the government to provide clearer direction, proposes greater regional decision-making around local water systems and emphasises the need for a greater focus on long-term, responsible investment and ownership within the industry. Independent Water Commission Chair Jon Cunliffe said he had heard a "strong and powerful consensus" that the system was not working for everyone. "There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector," he said.
----------
President Trump and China's President Xi will likely hold a long-awaited call later this week, the White House said, as trade tensions between the world's two biggest economies ratchet back up. Trump reignited strains with China last week when he accused the world's second-biggest economy of violating a deal that had led both countries to temporarily reduce huge tit-for-tat tariffs. "The two leaders will likely talk this week," Press Secretary Karoline Leavitt told reporters outside the West Wing when asked whether Trump and Xi would speak. Trump and Xi have yet to have any confirmed contact since the Republican returned to power, despite frequent claims by the US president that a call is imminent.
----------
BROKER RATING CHANGES
----------
Bank of America cuts HSBC to 'neutral' (buy) - price target 930 (960) pence
----------
Berenberg cuts GSK to 'hold' (buy) - price target 1,600 pence
----------
Jefferies raises Forterra price target to 235 (206) pence - 'buy'
----------
COMPANIES - FTSE 100
----------
British American Tobacco in a trading update said it expects full-year revenue to be slightly ahead of previous guidance, with its US operations expected to return to revenue and profit growth in both the first half and full year, "driven by strengthening Combustibles delivery and an excellent Velo Plus performance". Furthermore, it expects low-single digit revenue growth for New Category in the first half. Also for 2025, BAT expects the global tobacco industry volume to decrease by 2%. "While there is more to do, I am encouraged by the progress we are making through our Quality Growth focus, and prioritising investment to the largest profit pools, " said Chief Executive Tadeu Marroco. "I am confident that the investments we have made and the actions we are taking will drive a return to our mid-term algorithm in 2026. I am pleased with our progress in increasing financial flexibility driven by continued strong operating cash conversion and the completion of a partial monetisation of our stake in ITC."
----------
COMPANIES - FTSE 250
----------
Chemring said its full-year outlook is unchanged, with first-half pretax profit surging 74% on-year to GBP26.5 million from GBP15.2 million. Revenue increased 5% to GBP234.3 million from GBP223.4 million. Chemring also increased its interim dividend by 4% to 2.7 pence per share from 2.6p. Moreover, Chemring reported "record" first-half order intake of GBP488 million and a GBP1.30 million order book, "the highest in Chemring's history, providing excellent medium-term revenue coverage". "With this robust demand and trading environment the board's expectations for the full year are unchanged," Chief Executive Officer Michael Ord said. "Operational and trading performance has been in line with our expectations, with improving returns for our shareholders underpinned by solid cash conversion...With growing geopolitical uncertainty resulting in increased defence expenditure, particularly across NATO, the group is well positioned, with a strong and sustainable platform to increase revenue to GBP1 billion by 2030." Also, the company named Morgan Advanced Materials CEO Pete Raby as a new independent non-executive director, effective September 1. He is due to retire from the CEO role on July 1.
----------
Pennon Group reported revenue of GBP1.04 billion for the full year ended March 31, up from GBP907.8 million. However it swung to a pretax loss of GBP35.1 million from profit of GBP16.8 million. Ebitda decreased 0.8% to GBP335.6 million from GBP338.3 million. The company also declared a final dividend of 19.43 pence per share, down from 25.07p the year before. It said it expects a "return to profitability" in financial 2026. "We are well positioned for the future and stand ready to implement government legislation," it added. CEO Susan Davy commented: "Pennon has delivered a resilient operational performance during a demanding year, while building a robust platform for the future...our record year for investment has improved services that matter most to our customers. Whilst this has impacted profitability this year, it has been the right thing to do. As the only water company to have received an outstanding rating for our business plan for the third consecutive time, we have a track record of setting and delivering on stretching business plans."
----------
OTHER COMPANIES
----------
A consortium formed of Swedish hotel developer Pandox and Norwegian real estate firm Eiendomsspar said it has made an all-cash takeover offer for Dalata Hotel Group. The offer of EUR6.05 per share values all of Dalata at EUR1.3 billion. The price is a 27% premium to Dalata's share price before it announced a strategic review and formal sale process at the start of March. The consortium said it has not taken part in Dalata's formal sale process but is "seeking to engage constructively" with the Dalata board. The consortium has until July 15 to announce the intention to make an offer, or to announce that it does not intend to make an offer. Dalata had not yet issued a response to the announcement early Tuesday.
----------
Sundae Bar starts trading on AIM today, having raised GBP2.0 million in its move from the AQSE exchange through a placing of 25.0 million new shares at 8p each. "The company intends to derive revenue via its subscription tiers, transaction fees and advertising and promotional fees," Sundae Bar said. "Initially, the group will focus on the AI Agents (sellers) and consumers of AI agents (buyers) to create a network effect of growth. This structure is expected to allow the group to balance growth investments with operational sustainability." CEO Jill Kenney said: "oday's admission to AIM marks a major step in sundae_bar's growth journey, allowing us to accelerate the development and launch of our AI Agent marketplace platform, sundae_bar. The strong support we've received from investors reflects the growing recognition of the transformative role AI Agents will play in the future of businesses and individuals alike. Our platform has been designed to give developers the tools to scale and monetise their innovations while providing businesses and individuals with a trusted, streamlined way of accessing AI solutions."
----------
Thames Water said New York-based private equity firm KKR has pulled out of plans to invest in the utility and it is now progressing talks with senior creditors for an alternative to stabilise its finances. The heavily indebted supplier – which chose KKR as its preferred bidder at the end of March – said the investment firm indicated it would not be in a position to proceed with a bid and that its preferred partner status had lapsed. Thames Water said it intends to take forward discussions with "certain senior creditors" on an alternative plan to recapitalise the business. It will also hold talks with regulator Ofwat on the senior creditors' plan, alongside other stakeholders. Adrian Montague, chair of Thames Water, said: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal. The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support."
----------
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
HSBC HoldingsGlaxosmithklineForterraBritish American TobaccoChemringPennonSundae BarMorgan Advanced MaterialsDalata Hotel Gp