19th Feb 2025 16:54
(Alliance News) - European stocks fell on Wednesday, amid a new tariff threat from Donald Trump, with a strong inflation print also pegging London back.
The FTSE 100 index closed down 54.20 points, 0.6%, at 8,712.53. The FTSE 250 ended down 173.77 points, 0.8%, at 20,707.79, while the AIM All-Share closed down 5.09 points, 0.7%, at 719.43.
The Cboe UK 100 ended down 0.8% at 873.29, the Cboe UK 250 shed 1.1% at 18,026.50, while the Cboe Small Companies fell 0.5% at 15,921.57.
In European equities on Wednesday, the CAC 40 in Paris ended down 1.3%, while the DAX 40 in Frankfurt tumbled 1.8%.
US President Donald Trump escalated his trade offensive, threatening 25% tariffs on imported cars, as well as similar or higher duties on pharmaceuticals and semiconductors.
"Understandably this has helped drive European carmakers lower," said Joshua Mahony, chief market analyst at Scope Markets.
"It remains to be seen which of the floated tariffs will be implemented but there are now many tariff spinning plates in play," said Deutsche Bank's Jim Reid.
In Frankfurt, shares in carmaker Volkswagen fell 2.9%, while Mercedes lost 1.7%. Stellantis declined 1.6% in Paris.
US financial markets were lower at the time of the London close. The DJIA was down 0.3%, and the S&P 500 and Nasdaq Composite were 0.1% lower.
In London, UK consumer price inflation accelerated at a faster pace than expected last month, although economists felt the figures were not as bad as they look at first glance.
According to the Office for National Statistics, the pace of yearly consumer price inflation picked up to 3.0% in January, from 2.5% in December. The reading topped the FXStreet cited consensus of 2.8%.
It was the sharpest annual consumer price rise since March 2024's 3.2% increase. In January 2024, the inflation rate was 4.0%.
Annual core consumer price inflation picked up to 3.7% in January from 3.2% in December. The measure excludes energy, food, alcohol and tobacco.
Services price inflation accelerated to 5.0% from 4.4%.
ING said while the headline figure was a "tad higher" than expected, it was almost entirely because of a near 1% month-on-month increase in food prices, which is "hard to explain".
Barclays said the print adds further support to its view for a Bank of England March hold and a resumption of cuts from May.
"The beat in headline CPI furthers our view that not enough MPC members will be confident enough to deliver easing in March. However, the softer-than-expected services print, and progress on underlying services metrics, should mean that the broader view of a gradual disinflationary process from here is little changed. We continue to expect a resumption of cuts from May onwards when data outturns should give the MPC sufficient confidence to shift to sequential easing, in our view," the broker added.
Peel Hunt's Kallum Pickering said that while the "surprise should not derail further gradual rate cuts, it will keep the BoE in the slow lane - especially as rising employment taxes, minimum wage increases and higher regulated energy prices add to cost pressures in 2025."
"The data suit our base case for two more BoE rate cuts in 2025 - coming in May and August. That would take the bank rate to 4.0% following the August meeting. We expect the BoE to hold rates at its next meeting in March," he added.
The pound was quoted at USD1.2572 at the London equities close Wednesday, down from USD1.2616 at the close on Tuesday.
The euro stood lower at USD1.0409 at the European equities close Wednesday, against USD1.0462 at the same time on Tuesday.
Against the yen, the dollar was trading lower at JPY151.62 compared to JPY151.71 late Tuesday.
On the FTSE 100, Antofagasta rose 0.8%, as JPMorgan double-upgraded the miner to 'overweight' from 'underweight' and raised its December 2026 share price target by 50% to 2,400 pence from 1,600p.
"With fewer operational & macro risks in our view over 2025, we see Antofagasta standing out given its leading copper volumes growth," analysts at the bank said.
But Glencore fell 7.3% on poorly received results and as it said it was considering moving its listing from London.
Speaking at a post-earnings call, Chief Executive Officer Gary Nagle said the miner and commodity trader "ultimately" wants to ensure its shares are traded at the "right exchange".
"If there's a better one, and those include the likes of the New York Stock Exchange, we have to consider that," Nagle said.
"The leading candidate would be the US, we're not excluding any other exchange, but clearly the US is the leading candidates".
Glencore swung to a pretax loss of USD998 million in 2024 from a profit of USD5.42 billion in 2023, even as revenue rose 6.0% to USD230.94 billion from USD217.83 billion.
AJ Bell Head of Investment Analysis Laith Khalaf said the "fact the company's profitability is dictated by volatile commodity prices, over which it has no control, is always likely to be an obstacle to a really premium valuation."
BAE Systems ended 0.4% higher after a weak start, as it raised free cash flow guidance following slightly better-than-expected annual results.
Pretax profit edged up 0.3% to just over GBP2.33 billion. Pretax profit in 2023 came in at just under GBP2.33 billion. Revenue rose 14% to GBP26.31 billion in 2024, from GBP23.08 billion in 2023.
On an underlying basis, revenue was up 14% at GBP28.34 billion from GBP25.28 billion, while pretax profit was 6.0% higher at GBP2.62 billion from GBP2.47 billion. Underlying earnings before interest and tax climbed 14% to GBP3.02 billion from GBP2.68 billion.
Underlying sales and underlying Ebit were narrowly higher than Visible Alpha consensus of GBP28.11 billion and GBP3.00 billion respectively.
HSBC closed down 0.3% despite reporting strong results.
The London-based bank focused on Asia said pretax profit increased 6.5% to USD32.31 billion in 2024 from USD30.35 billion a year prior. Diluted earnings per share was USD1.24, up 8.8% from USD1.14.
Revenue fell 0.3% to USD65.85 billion from USD66.06 billion as operating expenses increased 3.0% to USD33.04 billion from USD32.07 billion.
"Overall, there is probably more for the market to like than not here, but the shares are now trading close to a 20 year high and look increasingly up with events," Greenwood, who has 'buy' rating on HSBC said.
Brent oil was quoted at USD76.41 a barrel at the London equities close on Wednesday, up from USD75.66 late Tuesday.
Gold was quoted lower at USD2,925.48 an ounce at the London equities close on Wednesday against USD2,928.05 at the close on Tuesday.
Thursday's UK corporate calendar has full-year results from British Gas owner Centrica, miner Anglo American and high street lender, Lloyds Banking Group.
The economic calendar for Thursday has an interest rate decision in China overnight, Canadian PPI data at 1330 GMT, and US weekly initial jobless claims figures, also at 1330 GMT.
By Jeremy Cutler, Alliance News reporter
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