25th Mar 2025 16:55
(Alliance News) - The FTSE 100 closed higher on Tuesday, taking heart from renewed strength on Wall Street, and gains in Shell after a well received strategy update.
The FTSE 100 index closed up 25.79 points, 0.3%, at 8,663.80. The FTSE 250 rose 58.78 points, 0.3%, at 19,981.21, and the AIM All-Share climbed 4.32 points, 0.6%, at 693.44.
The Cboe UK 100 ended up 0.2% at 866.14, the Cboe UK 250 closed 0.3% higher at 17,454.58, while the Cboe Small Companies rose 0.1% at 15,618.28.
"There is nothing better than a solid day on Wall Street to lift investor sentiment," remarked Russ Mould, investment director at AJ Bell.
After Monday's strong gains on Wall Street, stocks in New York were modestly higher once more at the time of the London equities close, with the DJIA and S&P 500 index 0.1% higher, and the Nasdaq Composite up 0.2%.
The latest advance in the US came despite a report showing consumer confidence fell for a fourth straight month in March, hitting its lowest level since the midst of the pandemic in 2021.
The US consumer confidence index fell 7.2 points to 92.9 in March, the Conference Board announced in a statement, noting that survey respondents had flagged growing concerns about the economic impact of President Donald Trump's trade and tariff plans.
The March figure was below market expectations of 94.2, according to Briefing.com, and underscores the sharp decline in confidence since the 2024 presidential elections.
"Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022," the Conference Board's Global Indicators senior economist Stephanie Guichard said in a statement.
She added that consumers' expectations "were especially gloomy," with confidence about future employment prospects falling to a 12-year low.
Samuel Tombs at Pantheon Macroeconomics said the report suggested the new administration’s plans for tariffs and spending cuts are "going down like a lead balloon with households".
"The headline confidence index now is 17 points lower than in October, just before the elections, and a massive 32 points lower than in March 2017, two months into Trump's first presidential term," he noted.
In European equities on Tuesday, the CAC 40 in Paris ended up 1.1%, while the DAX 40 in Frankfurt closed 1.1% higher.
The pound was quoted higher at USD1.2955 at the London equities close on Tuesday, compared to USD1.2906 at the close on Monday. The euro stood at USD1.0811 up against USD1.0791.
Against the yen, the dollar was trading lower at JPY149.73 compared to JPY150.56 late Monday.
On Wednesday, Chancellor Rachel Reeves delivers her spring statement amid a background of rising government debt costs, stagnant economic growth and increased demands for spending on defence.
The statement is an opportunity for the government to respond to the Office for Budget Responsibility's revised forecasts for the economy and public finances.
The OBR is the independent public finances watchdog, which produces the official forecasts for the economy and public finances used by the chancellor.
It must produce two forecasts each financial year. In each forecast the OBR judges whether the chancellor is on course to meet their targets for the public finances - often referred to as the fiscal rules.
While Reeves will respond to the forecast in her statement, she is expected to make announcements on spending and, possibly, tax, to ensure the fiscal rules are met.
James Smith at ING said the chancellor faces tough spending decisions, amid rising debt interest costs with Britain's public finances operating under "increasingly fine margins".
A lot has changed since the chancellor delivered the budget in autumn 2024, particularly geopolitically.
The Trump administration's imposition of tariffs on trading partners has disrupted the global trading environment and contributed to an increase in the cost of government debt.
The yield on the UK 10-year bond spiked as high as 4.90% in January compared to below 3.80% in September. On Tuesday, it was trading around 4.75%, adding to the government's debt interest bill.
"Higher yields mean higher debt servicing costs. And that's meant the already-limited breathing room the chancellor afforded herself back in October has all but disappeared," ING's Smith explained.
Ahead of the statement, the government announced cuts of GBP5 billion per annum to its welfare budget.
In addition, on Sunday, the chancellor told the BBC the costs of running the government would be cut to the tune of GBP2 billion per annum.
Other options thought to be under consideration by the chancellor are an extension to the freeze to income tax thresholds beyond the current plan for April 2028.
Ahead of the spring statement, the latest UK inflation figures will also be scrutinised. Headline and core CPI is expected to be little changed although services inflation could nudge down to 4.9% in February from 5.0% in January.
On the FTSE 100, rising metal prices supported Anglo American and Antofagsta, up 3.8% and 2.9% respectively.
Segro climbed 2.6% after saying it has formed a GBP1.0 billion joint venture with Pure Data Centres Group Ltd to build its first fully fitted data centre in west London.
The facility will target hyperscale customers and is expected to deliver a 9% to 10% net yield on cost.
Shell advanced 1.7% after analysts welcomed plans to boost shareholder returns and cut costs and spending.
Shell said it is "raising the bar" across key financial targets as it unveiled an ambition to become the world’s leading integrated gas and liquefied natural gas business.
The London-based oil major plans to enhance shareholder distributions to 40% to 50% of cash flow from operations through the cycle from 30% to 40% before. It will continue to prioritise share buybacks, while maintaining a 4% per annum progressive dividend policy.
RBC Capital Markets said today’s update reads as more "evolution than revolution."
At the margin, the guidance looks "better than expected, with higher cost reductions, capex guidance coming in lower at the midpoint versus consensus, and higher shareholder returns than anticipated," it added.
"Overall, the update screens well, and we’d put this in the 'boring but good' category", the broker said.
But Kingfisher plunged 14% as soft guidance accompanied annual results prompting analysts to predict earnings downgrades of around 6%.
Kingfisher reported a 36% decline in its pretax profit for its financial year ended January 31, to GBP307 million from GBP475 million the year before. On an adjusted basis, it fell 7.0% to GBP528 million from GBP568 million.
Driving the weaker bottom line was a reduction in sales, falling 1.5% to GBP12.78 billion from GBP12.90 billion, below Visible Alpha consensus of GBP12.84 billion.
Looking ahead, Kingfisher guides adjusted pretax profit of between GBP480 million and GBP540 million for financial 2026, 6% below consensus at the mid-point.
It also expects free cash flow of between GBP420 million and GBP480 million. This compares to GBP511 million realised in financial 2025.
On the FTSE 250, Morgan Sindall rose 8.6% after it said it expects full-year results to be slightly ahead of expectations after a pick-up in trading at its Fit Out division.
THG's refinancing and equity raise was given the thumbs up, rising 5.5%, with analysts welcoming the likely lower interest costs and bolstered balance sheet.
Brent oil was quoted lower at USD72.71 a barrel at the London equities close Tuesday down from USD72.98 late Monday.
Gold firmed at USD3,023.13 an ounce on Tuesday against USD3,011.44 on Monday.
Wednesday's UK corporate calendar has full-year results from housebuilder Vistry, bookmaker Evoke and online wine seller Virgin Wines.
The economic calendar for Wednesday has UK CPI and PPI prints, the Spring Statement and US durable goods orders data.
By Jeremy Cutler, Alliance News reporter
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