18th Mar 2025 16:55
(Alliance News) - London's FTSE 100 closed in the green on Tuesday, although below early highs, while it was another record-breaking day in Frankfurt after a key investment package was approved.
The FTSE 100 index closed up 24.94 points, 0.3%, at 8,705.23. The FTSE 250 ended up 69.86 points, 0.4%, at 20,097.77, and the AIM All-Share advanced 5.32 points, 0.8%, at 694.28.
The Cboe UK 100 ended up 0.2% at 869.61, the Cboe UK 250 closed up 0.5% at 17,515.34, and the Cboe Small Companies ended up 0.4% at 15,673.90.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.5% and the DAX 40 in Frankfurt closed 1.0% higher. The DAX had earlier hit an all-time high of 23,476.01.
Frankfurt's latest gains came as German lawmakers passed a giant defence and infrastructure investment package proposed by chancellor-in-waiting Friedrich Merz to strengthen the country amid geopolitical upheaval.
Lower house MPs voted by a margin of 513 against 207 for what has been dubbed a fiscal "bazooka" worth hundreds of billions of euros, which required a relaxation of the debt brake enshrined in the constitution.
"With the change to its constitution, Germany is re-entering the European mainstream after a period of tight constraints on borrowing," Holger Schmieding at Berenberg said.
"Instead of a big one-off shift to a higher level of GDP, Germany is heading for a prolonged period of stronger gains in demand," he added.
"As a rough guess, Germany's fiscal bazooka may raise its rate of real GDP growth by [around] 0.3 [percentage points] for the next few years," he estimated.
Defence firm Rheinmetall added 5.3% in Frankfurt, continuing its strong recent run.
European Union chief Ursula von der Leyen said Europe must build a "credible" deterrence capability within five years.
"If Europe wants to avoid war, Europe must get ready for war," von der Leyen warned – setting a target for the continent to "have re-armed and developed the capabilities to have credible deterrence".
Meanwhile, the White House said a phone call between Donald Trump and Russian President Vladimir Putin over a potential ceasefire in Ukraine has started was going "well."
The call began at 1400 GMT and so far had continued for almost an hour, deputy chief of staff Dan Scavino said on X. "The call is going well, and still in progress," he said.
Stocks in New York were lower at the London equities close, with the DJIA down 0.7%, the S&P 500 index 1.0% lower, and the Nasdaq Composite down 1.4%.
High-profile tech names led the fallers, Nvidia down 1.7% ahead of an eagerly-awaited address from Chief Executive Jensen Huang, and Tesla down 3.8%.
Google parent Alphabet fell 2.4% after it announced the USD32 billion acquisition of security platform Wiz, citing the need for greater cybersecurity capacity as artificial intelligence embeds itself in technology infrastructure.
The pound was quoted higher at USD1.2991 at the London equities close Tuesday, compared to USD1.2987 at the close on Monday. The euro stood at USD1.0931 against USD1.0922. Against the yen, the dollar was trading higher at JPY149.55 compared to JPY148.57 late Monday.
The greenback was mixed after figures showed US industrial production accelerated in February.
According to data from the Federal Reserve, industrial production increased 0.7% monthly in February, following a 0.3% rise in January. The latest reading beat the FXStreet-cited consensus of 0.2% growth.
Manufacturing output rose 0.9%, bolstered by an 8.5% jump in motor vehicles and parts. Excluding the auto sector, manufacturing output climbed 0.4%. Mining production rebounded 2.8% after falling 3.2% in January, while utilities output declined 2.5%, weighed by lower electricity and natural gas generation.
On Wednesday, the Federal Reserve is widely expected to leave interest rates on hold. The CME FedWatch Tool places a 99% probability that the Fed will stand pat, holding the target range for the federal funds rate at 4.25-4.50%.
In Japan, the central bank is also expected to keep interest rates steady in its next decision on Wednesday, although a hike later this year is broadly anticipated by analysts.
The Bank of Japan revised its short-term policy rate in January with a 25 basis point hike to 0.5%, the highest level in 17 years.
Bank of America said: "We see a near-zero likelihood of a hike and expect the central bank to keep the policy rate unchanged at 0.5%. A hold is also expected by all 52 analysts surveyed by Bloomberg."
But Kathleen Brooks, research director at XTB, noted the prospect of more rate increases in the coming months is increasing.
"The market is expecting just over one rate hike this year, as the BoJ continues to normalise monetary policy, however the risk is that the market is behind the curve. Thus, a hawkish tone from the BoJ this week could see another surge higher in the yen and it may also be good news for Japanese equities."
On Thursday, the Bank of England is also expected to leave rates unchanged.
On the FTSE 100, retailers, banks, and miners kept the blue-chip index in the green with JD Sports Fashion, Antofagasta, and Barclays among prominent risers.
On the FTSE 250, results brought contrasting fortunes for Bytes Technology, up 17%, Computacenter, up 10% and Close Brothers, down 22%.
Surrey, England-based computer software company Bytes was in confident mood, predicting continued high demand for its software, AI and IT services from both corporate and public sector clients.
Hatfield, England-based technology services provider Computacenter said it enjoyed the "most profitable" second half in its history.
"We executed well in North America, achieving another record year while Germany performed robustly. Technology Sourcing momentum improved through the year and we were particularly pleased with Professional Service's double-digit growth," Chief Executive Officer Mike Norris said.
But London-based bank, broker and asset manager Close Brothers lowered net interest margin guidance as it fell into the red at the half-year end, reflecting well-documented provisions in relation to motor finance commissions.
Full-year net interest margin is seen around 7%, slightly below the first-half exit rate of 7.1%, reflecting "temporary factors" and "competitive new business margins", the firm said.
KBW Europe pointed out NIM guidance was below 7.2% consensus and, combined with "lacklustre" near-term volume growth, results in "material" downgrades.
The broker reduced adjusted earnings per share forecasts for financial 2025 by 6% to 58.0 pence from 61.4p, for financial 2026 by 24% to 50.5p from 66.2p and for financial 2027 by 16% to 67.1p from 80.2p.
Panmure Liberum thinks the company is trying to do "all the right things", and for that there should be "some credit given."
"But the questions remain: what will be left post a motor outcome; has the positioning of the bank been impacted by the need to husband capital; can the costs be removed and kept out; why still own Winterflood," the broker commented.
Gold's recent ascent continued, with the yellow metal hitting USD3,035.29 an ounce on Tuesday against USD2,995.90 on Monday.
On AIM, Greatland Gold climbed 9.8%, while blue chips Endeavour Mining rose 1.4%, and Fresnillo advanced 1.7%.
Brent oil was quoted lower at USD70.76 a barrel at the London equities close Tuesday from USD71.04 late Monday.
Wednesday's UK corporate calendar has full-year results from Asia-focused insurer Prudential and London-based asset manager M&G.
The economic calendar for Wednesday has an interest rate decision in Japan overnight, the US interest rate call at 1800 GMT and eurozone CPI figures at 1000 GMT.
By Jeremy Cutler, Alliance News reporter
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