28th Jul 2025 16:59
(Alliance News) - The FTSE 100 gave up early gains to close lower on Monday as an initial positive reaction to the EU-US trade deal was followed by caution ahead of a pivotal week of data, earnings and central bank meetings.
The FTSE 100 index closed down 38.87 points, 0.4%, at 9,081.44. The index had traded as high as 9,169.01.
The FTSE 250 closed 166.18 points lower, 0.8%, at 21,951.80, and the AIM All-Share closed down 3.62 points, 0.5%, at 773.02.
The Cboe UK 100 ended down 0.5% at 906.67, the Cboe UK 250 fell 0.8% to 19,252.51, but the Cboe Small Companies closed up 0.2% at 17,853.44.
In European equities on Monday, the CAC 40 in Paris fell 0.4%, while the DAX 40 in Frankfurt declined 1.0%.
Markets had initially opened higher, taking a glass half full view of the EU-US trade deal.
AJ Bell's Russ Mould said markets took the view that the outcome "could have been worse", the risk of an escalating trade war has been lowered and that the EU is better off than it was on April 2, after the United States’ initial launch of baseline and reciprocal tariffs.
The deal, struck at talks in Scotland over the weekend, will see US tariffs of 15% on most imports from the EU.
In addition, the EU has agreed to spend hundreds of billions of dollars on US energy products and weapons.
US President Donald Trump said this is probably the "biggest deal ever reached in any capacity, trade or beyond trade", as he announced the agreement.
European Commission President Ursula von der Leyen said the agreement creates "certainty in uncertain times." for citizens and businesses on both sides of the Atlantic.
But France’s Prime Minister Francois Bayrou said the EU had "resigned itself into submission", while Germany’s biggest industry body, the Federation of German Industries, warned that the agreement was "an inadequate compromise" that would damage the country’s export-oriented industry.
Mark Haefele, chief investment officer, UBS Global Wealth Management said after the strong market rally, investors should prepare for "renewed volatility" in the near term.
"Potential market dips could offer an opportunity for investors to build long-term exposure to stocks," he suggested.
The pound eased to USD1.3403 late on Monday afternoon in London, compared to USD1.3437 at the equities close on Friday. The euro traded at USD1.1620, sharply lower against USD1.1737. Against the yen, the dollar was trading higher at JPY148.45 compared to JPY147.69.
In New York, the Dow Jones Industrial Average was down 0.1%, the S&P 500 was little changed, and the Nasdaq Composite was up 0.1%.
The yield on the US 10-year Treasury was unchanged at 4.42%. The yield on the US 30-year Treasury was also flat at 4.96%.
On Wednesday, the Federal Reserve announces it latest interest rate decision. The US central bank is widely expected to maintain the target range for the federal funds rate at 4.25%-4.50%, despite political pressure to cut.
The unity of the decision will be in focus given calls from Fed officials including Christopher Waller for lower rates. Speaking recently in Washington, Waller argued that any inflation from tariffs would be temporary, and said the FOMC should lower rates. "Our sense is that the committee is more split than usual, with some members content to wait-and-see, while others are anxious to take out some insurance cuts," Wells Fargo said.
Citi thinks two governors, Waller and Michelle Bowman, could potentially dissent in favour of cutting the policy rate.
But the bank expects Chair Powell will reiterate that most Fed officials think it will be appropriate to resume policy rate cuts this year, leaving the September meeting priced for a likely resumption of rate cuts.
Investors will also cast an eye over earnings from four of the Magnificent 7, Meta Platforms, Microsoft, Amazon and Apple. In addition, a second quarter US GDP reading will be released on Thursday, with nonfarm payrolls to follow on Friday.
On the FTSE 250, FirstGroup climbed 1.0% after buying Leeds-based bus operator Tetley's Motor Services Ltd for an undisclosed amount.
Tetley's and FirstGroup own adjacent bus depots in central Leeds. FirstGroup will integrate Tetley's 55-strong fleet of coaches and buses into its First Bus business.
FirstGroup did not provide financial details of the acquisition, but said Tetley's revenue in the year that ended March 31 was GBP5.3 million. Earnings before interest, tax, depreciation and amortisation totalled GBP1.4 million.
But Ocean Wilsons Holdings plunged 14% as it agreed terms for an all-share merger with Hansa Investment that will see the combined firm take on Hansa's name and listing in London as a closed-ended investment fund.
Ocean Wilsons will delist its own shares from London and also from the Bermuda Stock Exchange.
The combination was first announced by the two Bermuda-based investment companies back in June. They said it will create a company with "meaningful scale" at GBP900 million in net assets across investment funds, direct equities, and private markets.
Meanwhile, Drax rose 1.6% as Citi upgraded to 'neutral' from 'sell' on improved outlook for share buybacks and Quilter climbed 0.3% as Deutsche Bank raised to 'hold' from 'sell'.
Elsewhere, STV plummeted 26% after it warned full-year revenue and adjusted operating profit are expected to be materially below consensus.
Chief Executive Rufus Radcliffe said: "The deteriorating macroeconomic backdrop continues to lower business confidence impacting both markets in which we operate."
Brent oil was quoted higher at USD69.65 a barrel in London on Monday, from USD68.66 late Friday. Gold fell to USD3,314.26 an ounce against USD3,329.51.
The spike in the oil price supported oil majors BP, up 2.2% and Shell, up 0.6%.
The biggest risers on the FTSE 100 were BP, up 8.80 pence at 406.60p, Airtel Africa, up 3.20p at 198.20p, Land Securities, up 6.00p at 590.50p, Rightmove, up 7.20p at 787.60 and Shell, up 19.50p at 2,687.00p.
The biggest fallers on the FTSE 100 were BT, down 11.30p at 211.40p, Babcock International, down 33.00p at 1,010.00p, Marks & Spencer, down 9.60p at 345.40p, Rentokil Initial, down 9.90p at 361.00p and BAE Systems, down 41.50p at 1,805.00p.
Tuesday's local corporate calendar has half year results from pharmaceuticals firm AstraZeneca, high street lender Barclays, specialty chemicals company Croda and provider of student accommodation, Unite Group.
The global economic calendar on Tuesday sees UK mortgage approvals figures plus US home price data and a consumer confidence report.
By Jeremy Cutler, Alliance News reporter
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