4th Jun 2025 07:50
(Alliance News) - Stocks were called higher in the UK on Wednesday, as industry spokespeople cautiously welcome Donald Trump's decision to keep tariffs at 25% on British steel and aluminium for now.
Meanwhile, Swissquote's Ipek Ozkardeskaya noted that US stocks on Tuesday were "surprisingly strong".
"So why are US stocks still being bought? There are several explanations: FOMO: Fear of missing out on the rally, TACO: Trump Always Chickens Out, or economic data/Federal Reserve [Fed] hopes?"
"But trade headlines were negative yesterday while the economic data was mixed and the Federal Reserve [Fed] is reluctant to move due to rising inflation expectations," Ozkardeskaya continued. "So it's probably FOMO—and it feels fragile.
"Today, investors will watch the ADP employment report and ISM non-manufacturing data...Strong numbers may support further gains while soft figures maybe could trigger a pullback. Or maybe not. Markets seem to have their own agenda, and the fear of missing a potential rally appears enough to fuel optimism—no matter how weak the forecasts, or the data."
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 6.3 points, 0.1%, at 8,793.32
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Hang Seng: up 0.6% at 23,653.95
Nikkei 225: up 0.9% at 37,798.47
S&P/ASX 200: up 0.9% at 8,541.80
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DJIA: closed up 214.16 points, 0.5%, at 42,519.64
S&P 500: closed up 0.6% at 5,970.37
Nasdaq Composite: closed up 0.8% at 19,398.96
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US 10-year Treasury yield: 4.46% (4.46%)
US 30-year Treasury yield: 4.98% (4.97%)
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EUR: lower at USD1.1372 (USD1.1385)
GBP: higher at USD1.3516 (USD1.3499)
USD: higher at JPY143.99 (JPY143.24)
GOLD: higher at USD3,355.51 per ounce (USD3,349.93)
OIL (Brent): lower at USD65.40 a barrel (USD65.73)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
09:30 EDT Canada composite PMI
09:45 EDT Canada interest rate decision
10:00 CEST eurozone composite PMI
09:50 CEST France composite PMI
09:55 CEST Germany composite PMI
09:30 BST UK composite PMI
08:15 EDT US ADP unemployment
09:45 EDT US composite PMI
10:00 EDT US ISM services PMI
10:30 EDT US EIA crude oil stocks
14:00 EDT US Fed's Beige Book
08:30 EDT US Federal Reserve Governor Lisa Cook speaks
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The UK steel industry has welcomed Donald Trump's decision to keep tariffs at 25% on British steel and aluminium for now. The US president has decided to "provide different treatment" to the UK after a deal that was struck between Washington and London last month, as he doubled tariffs on imports from elsewhere to 50%. Levies will remain at 25%, however Britain could still be subject to the higher 50% rate from July, or the quotas in the agreement could come into force, effectively eradicating the tax. The 50% tariff rate for imports of steel and aluminium from other nations came into force at 0001 Washington DC time on Wednesday, shortly after 0500 in the UK. Gareth Stace, the director general of UK Steel, said that Trump's decision is a "welcome pause". He added: "Continued 25% tariffs will benefit shipments already on the water that we were concerned would fall under a tax hike. "However, uncertainty remains over timings and final tariff rates, and now US customers will be dubious over whether they should even risk making UK orders. The US and UK must urgently turn the May deal into reality to remove the tariffs completely." Prime Minister Keir Starmer's trade deal with the US, struck last month, included relief on the steel and aluminium tariffs, but it has not yet come into force.
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UK Chancellor Rachel Reeves is set to tear up Treasury rules as she announces billions of pounds of investment in public transport in the North and Midlands. The GBP15.6 billion package for mayoral authorities is expected to include funding to extend the metros in Tyne & Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire. Announcing the investment in a speech in Manchester on Wednesday, the chancellor will argue that Britain "cannot rely on a handful of places forging ahead of the rest of the country" and champion a "new economic model – driven by investment in all parts of the country". She is also expected to confirm that next week's spending review will include changes to the rules in the Treasury's Green Book that determine whether projects receive funding. Green Book rules have been criticised in some quarters for favouring investment in London and the South East, with Labour MP Jeevun Sandher, a member of the Commons Treasury Committee, saying in April it had a "hardwired London bias". Reeves is expected to argue that changing the rules will ensure the government "gives every region a fair hearing when it comes to investments". But it will also mean more money for areas of the North and Midlands, including the so-called "Red Wall", where Labour MPs face an electoral challenge from Reform UK.
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German Chancellor Friedrich Merz is travelling to Washington on Wednesday evening for his first visit since taking office. He plans to meet US President Donald Trump at the White House on Thursday. A one-to-one meeting and a joint lunch are planned. The subsequent press conference in the Oval Office is eagerly awaited. Previous visits by Ukrainian President Volodymyr Zelenksy and South African President Cyril Ramaphosa were accompanied by dramatic scenes. The meeting is expected to focus on efforts to end the war in Ukraine, NATO's response to growing external threats, and the tariff dispute between the US and the EU. Merz has already made it clear that he is not travelling to Washington as a "supplicant" and will confidently represent European positions there. The German chancellor is only going to be in the US capital for around 17 hours. He is due to leave Berlin on Wednesday evening after a dinner with Germany's state premiers, and is expected to arrive in Washington after midnight. He is expected to spend the night at the president's guest house, Blair House. The programme at the White House is scheduled to start late Thursday morning.
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Established Western carmakers, including from Germany, are falling dangerously behind fast-moving Asian competitors, with some potentially facing questions over their long-term viability, according to consultancy EY. Carmakers face a crisis that EY expects to intensify this year and for some legacy manufacturers, their entire business model is at stake, said EY automotive expert Constantin Gall. "If profits continue to erode, some may face questions about their survival. Competition in the industry is currently brutal," he added. A new EY analysis of first-quarter earnings from the world's 20 largest carmakers shows German and US carmakers losing ground in both revenue and profits, while Asian firms - especially in China - made sharp gains. Gall warned that weak demand, high costs and a slow shift to electric vehicles are straining German carmakers. Adding to their woes is a decline in Chinese market share, where local brands are increasingly displacing Western names. Tensions in the US market also weigh heavily. New 25% tariffs introduced in April by President Donald Trump could lead to losses in the billions on both sides of the Atlantic, Gall said.
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Critically needed economic growth in Africa is being held back by high borrowing costs imposed by international lenders, with unpredictable US policy changes adding to the strain, the head of the G20 panel on the continent said. Seasoned politician and anti-apartheid activist Trevor Manuel chairs the panel of experts working on proposals to address issues affecting Africa, including high debt, to be presented at a summit of the Group of 20 leading economies in November. African nations are not necessarily more indebted than major economies but they face higher debt servicing costs, Manuel told AFP in an interview. The "unbelievably expensive and prohibitive" cost of capital for African nations has hobbled their development, said Manuel, who served as finance minister in post-apartheid South Africa for more than a decade. "We know that the risk premiums in general on Africa are much higher than they need to be, and that impacts them on the debt service costs," he added. South Africa is the only African nation in the G20 and has made debt sustainability for developing countries one of the priorities of its presidency of the group of 19 countries, the African Union and EU.
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NATO is planning to significantly expand its military capabilities to strengthen deterrence and defence against the continued threat from Russia, with plans to boost existing targets by about 30%, dpa has learnt from alliance sources. The new objectives include increasing stockpiles of long-range cruise missiles and drones, as well as strengthening air defence and artillery systems, according to sources. To meet these goals, NATO member states are expected to receive updated national planning targets, according to the information. The targets are due to be formally adopted at a meeting of NATO defence ministers in Brussels on Thursday. However, reaching the new targets will be challenging, with senior military officials saying member states are already falling about 30% short of existing goals. The exact national targets remain classified, though some details are expected to be released after Thursday's meeting.
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BROKER RATING CHANGES
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Citigroup reinitiates Johnson Matthey with 'neutral' - price target 1,800 pence
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Jefferies raises Judges Scientific to 'buy' (hold) - price target 9,100 (8,500) pence
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Jefferies raises AB Dynamics to 'hold' (underperform) - price target 1,620 (1,660) pence
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COMPANIES - FTSE 100
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GSK announced that the second tranche of its GBP2 billion share buyback programme, worth up to GBP450 million, will commence today. The first tranche was for up to GBP700 million, starting on February 24 and completing on Tuesday, June 3. GSK said it expects the second tranche to be completed by September 19.
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COMPANIES - FTSE 250
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B&M European Value Retail published its results for the financial year ended March 29. Group revenue rose 1.6% on-year to GBP5.57 billion from GBP5.48 billion, but pretax profit fell 13% to GBP431 million from GBP498 million. "In FY25, the Group's sales performance, particularly within the B&M UK business, was below expectations amid challenging market headwinds," the company stated. "However, the group's overall profit delivery remained resilient, particularly in comparison to its longer-term history." On a 52-week comparable basis [the prior financial year had an extra week], group revenue rose 3.7% which was "primarily driven by the contribution from new stores and positive like-for-like [LFL] performance in France, which offset a negative 3.1% LFL performance in the B&M UK business". It said the current financial year "will bring retail sector-wide challenges of increased minimum wage costs, higher employee national insurance and other taxes, and inflation on input costs".
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discoverIE Group announced its results for the year ended March 31. Pretax profit surged 44% to GBP32.0 million from GBP22.2 million the year before, despite revenue decreasing 3.2% to GBP422.9 million from GBP437.0 million. Reported fully diluted earnings per share jumped 58% to 25.0p from 15.8p. discoverIE declared a full-year dividend payout of 12.5p per share, up 4.2% on-year from 12.0p. Looking ahead, the firm noted that US tariffs will have a limited direct impact on its business. "discoverIE is aligned with target markets which are underpinned by structural growth drivers and, with the addition of the security market during the year, our total market opportunity increased to over USD30 billion," commented Chief Executive Nick Jefferies. "With a strong pipeline of organic and inorganic opportunities, the group is well placed to continue its resilient performance and development."
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Paragon Banking released results for the six months to March 31. Half-year net interest income rose to GBP247.9 million on-year from GBP239.9 million, while pretax profit increased to GBP140.1 million from GBP110.6 million. Its net interest margin decreased to 3.13% from 3.19%, and the underlying return on tangible equity increased to 17.8% from 17.4%. Paragon declared a first-half dividend of 13.6p per share, up from 13.2p the prior year. The company furthermore said the lending environment is increasingly stable, and cited a more predictable loan affordability outlook. Also, it said interest rates are expected to continue moving downwards. "We remain vigilant to the potential impacts of inflationary movements in light of the ongoing geopolitical uncertainties," the company said.
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OTHER COMPANIES
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Johnson Service Group announced its intention to apply for admission to trading on the Main Market of the London Stock Exchange. It has been trading on AIM since 2008. "The board is cognisant that AIM has served the group well over many years and considered, in detail, the rationale for a move-up from AIM to the Main Market," the company explained. "The board concluded that admission would allow for access to deeper pools of capital and a broader range of investors, increased liquidity in trading of the group's shares, and enhance the group's corporate profile." It said it does not intend to raise funds or offer new shares in connection with the admission. Also, Johnson Service announced that it is extending its current share buyback programme by a further GBP15.0 million, making GBP30.0 million in total. This will end no later than December 31.
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By Emma Curzon, Alliance News reporter
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