11th Aug 2025 16:57
(Alliance News) - The FTSE 100 outperformed European peers on Monday as investors weighed geopolitical developments ahead of a busy week of economic data.
The FTSE 100 index closed up 33.98 points, 0.4%, at 9,129.71. The FTSE 250 ended 69.06 points lower, 0.3%, at 21,889.49, while the AIM All-Share finished down 4.25 points, 0.6%, at 758.21.
The Cboe UK 100 ended up 0.3% at 913.36, the Cboe UK 250 closed down 0.4% at 19,270.29, and the Cboe Small Companies fell 0.1% at 17,109.52.
Figures on the UK jobs market and average earnings on Tuesday will be watched closely, not least by the Bank of England, as it weighs stubborn inflation against slowing growth and a cooling labour market.
Since last October's government budget, UK unemployment has risen to 4.7% from 4.3%, and last Thursday, the BoE predicted the unemployment rate will rise to just under 5% by the middle of 2026.
Meanwhile, data on Thursday will likely confirm the UK economy slowed in the second quarter of 2025 after a strong start to the year.
Last Thursday, the Bank of England forecast second-quarter UK GDP growth of 0.1%, slowed from 0.7% in the first quarter. Figures have already shown that GDP contracted by 0.3% in April and 0.1% in May.
The BoE said some of the first-quarter strength may have been due to front-loading ahead of expected tariffs.
The UK's central bank said underlying UK GDP growth has remained subdued, highlighting "downside domestic and geopolitical risks".
In Europe, the CAC 40 in Paris fell 0.6%, while the DAX 40 in Frankfurt eased 0.3%.
In New York, the Dow Jones Industrial Average was down 0.3%, the S&P 500 was flat, and the Nasdaq Composite was up 0.2% ahead of inflation figures on Tuesday.
Goldman Sachs forecasts core CPI to rise 0.3% on-month and 3.1% on-year, a touch above 3.0% consensus, and sees headline CPI up 0.3% on-month, corresponding to a year-over-year rate of 2.8%.
"Over the next few months, we expect tariffs to continue to boost monthly inflation and forecast monthly core CPI inflation between 0.3% and 0.4%," Goldman said.
Aside from tariff effects, "we expect underlying trend inflation to fall further this year," Goldman said.
Barclays expects the print to show a modest pick-up in core inflation, "amid gradual but definitive tariff pass-through".
Barclays noted that while US firms intend to raise prices, they have been resorting to other mitigation measures first.
On Saturday, a senior US central bank official backed three interest rate cuts this year to guard against further weakening in the labour market.
In prepared remarks to a summit in Colorado, Federal Reserve Vice Chair for Supervision Michelle Bowman called for a "proactive approach" in lowering the benchmark lending rate.
Doing so "would help avoid a further unnecessary erosion in labour market conditions" and reduce the chance that the Fed's rate-setting committee will need to make a larger cut if the jobs market worsened further, she said.
Bowman was one of two Fed governors to dissent at the central bank's July policy meeting, a rare occurrence even as officials voted to hold rates steady for a fifth straight gathering.
Elsewhere, EU foreign ministers will hold emergency talks to discuss their next steps before talks between presidents Vladimir Putin and Donald Trump, as Europe fears any deal made without Ukraine could force unacceptable compromises.
The two leaders will meet in the US state of Alaska on Friday to try to resolve the three-year war, but the EU has insisted that Kyiv and European powers should be part of any deal to end the conflict.
The idea of a US-Russia meeting without Ukrainian President Volodymyr Zelensky has raised concerns that a deal would require Kyiv to cede swathes of territory, which the EU has rejected.
In addition, the market looked ahead to the deadline for US-China trade talks on Tuesday.
AJ Bell analyst Russ Mould said the market seems "very relaxed" ahead of the deadline, reflecting the assumption that an extension is in the offing and a deal will eventually be reached.
"While the mood music between Beijing and Washington has improved, there is some risk investors' confidence proves misplaced," he added.
The pound eased to USD1.3402 late on Monday afternoon in London, compared to USD1.3450 at the equities close on Friday. The euro fell to USD1.1591, lower against USD1.1666. Against the yen, the dollar was trading higher at JPY148.09 compared to JPY147.73.
The yield on the US 10-year Treasury was at 4.28%, trimmed from 4.29%. The yield on the US 30-year Treasury was 4.84%, narrowed from 4.86%.
On London's FTSE 100, Marks & Spencer rose 2.4% as it began taking click and collect orders for clothing and home orders for the first time since a cyber attack hit the retailer in April.
"Click & Collect is back," the retailer said in an update posted on Instagram.
On the FTSE 250, Diversified Energy surged 6.4% as it increased cost savings targets for its Maverick Natural Resources acquisition, as it reported strong growth in revenue and adjusted earnings.
The gas and oil production company said adjusted earnings before interest, tax, depreciation and amortisation rose to USD417.98 million in the first half of 2025 from USD217.79 million a year ago as IFRS revenue more than doubled to USD778.1 million from USD368.7 million the previous year.
Looking ahead, Diversified Energy reiterated its full-year guidance, which incorporates a contribution from assets gained through its USD1.28 billion acquisition of Maverick Natural Resources, a deal completed in March.
Annual savings from the Maverick deal are now seen at USD60 million, up from USD50 million previously, following "strong execution" during the integration process.
Brent oil was quoted at USD66.49 a barrel in London on Monday, down from USD66.63 late Friday. Gold declined to USD3,347.03 an ounce against USD3,393.20.
The biggest risers on the FTSE 100 were Hikma Pharmaceuticals, up 48.00 pence at 1,788.00p, Pershing Square Holding, up 106.00 pence at 4,118.00p, Marks & Spencer, up 8.40p at 340.40p, Airtel Africa, up 5.00p at 212.00p and Fresnillo, up 37.00p at 1,738.00p.
The biggest fallers on the FTSE 100 were Croda International, down 91.00p at 2,478.00p,
Intercontinental Hotels Group, down 222.00p at 8,602.00p,
Mondi, down 27.00p at 1,052.00p, JD Sports Fashion, down 1.88p at 85.82p and Experian, down 73.00p at 3,731.00p.
Tuesday's local corporate calendar has half-year results from industrial engineering group Spirax, plus trading statements from housebuilder Bellway and recruiter PageGroup.
The global economic calendar on Tuesday has the Australian interest rate decision overnight, UK unemployment and average wages data, plus a US inflation print.
By Jeremy Cutler, Alliance News reporter
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