25th Jun 2025 12:02
(Alliance News) - European equities failed to cling onto early momentum and moved lower by Wednesday afternoon, failing to replicate the confident gain seen in New York overnight.
The impetus from an Israel-Iran ceasefire faded, with stocks that had climbed after the geopolitical optimism, returning progress.
The FTSE 100 index was down just 3.65 points at 8,755.34. The FTSE 250 fell 4.87 points, 0.1% at 8,754.12, and the AIM All-Share was down 1.13 points, 0.2%, at 761.41.
The Cboe UK 100 was down 0.1% at 873.24, while the Cboe UK 250 was also 0.1% lower at 18,856.45. The Cboe Small Companies similarly gave back 0.1% to 17,257.50.
In Frankfurt, the DAX 40 fell 0.3%. The CAC 40 in Paris was 0.2% lower.
Hurting the FTSE 100, a number of names that surged on the back of ceasefire hope returned gains on Wednesday. Among them, lender Barclays fell 1.2%, while miner Anglo American declined 0.7%. They had risen 4.7% and 1.9% on Tuesday on news of a ceasefire.
Hargreaves Lansdown analyst Susannah Streeter commented: "A leaked report from US Intelligence casting doubt on the effectiveness of the US strikes in crippling Tehran's nuclear capabilities, has led to some worries that military action could resume."
US President Donald Trump, however, said US strikes led to the "total obliteration" of Iran's nuclear capabilities and set the country's atomic programme back "decades".
A barrel of Brent faded to USD67.75 on Wednesday, from USD68.08 at the time of the London equities close on Tuesday. Gold rose to USD3,326.51 an ounce from USD3,314.07.
Rabobank analysts commented: "So, markets will remain at the whims of the parties to the conflict, and to the fragile ceasefire. But any upside risk to energy prices may be capped by reports that the Trump administration has considered a range of options in case of a major disruption to oil supply. The Strategic Petroleum Reserve may not have enough capacity to offset a blockage of the Strait of Hormuz, but the reports do underscore that the US and the rest of the world will not stand for such a blockage.
"And, with the ceasefire holding so far, markets have turned their focus elsewhere.
Last week's FOMC meeting revealed that the policymakers are largely split into two camps: a group that wants zero cuts this year, and another group that believes two cuts are appropriate. Waller and Bowman are clearly in the latter group, and they feel a sense of urgency. Both indicated they are willing to cut as early as next month. But convincing the hawks will be difficult, given the recent data and lingering uncertainty. Fed Chair Powell's testimony before the House Financial Services Committee perhaps gave markets a shimmer of hope."
Federal Reserve Chair Jerome Powell told lawmakers Tuesday that the central bank can afford to wait for the impact of tariffs before deciding on further interest rate cuts.
Analysts at Goldman Sachs commented: "Later in his testimony, Powell noted that lower-than-expected inflation or a weaker labor market would push the FOMC 'in a direction of being able to cut sooner', while 'if the labor market remains strong and we do see higher inflation', the FOMC 'would still get around to cutting, but it would be later'."
Powell testified before the House Committee on Financial Services on Tuesday. He heads to the Senate on Wednesday.
In New York, the Dow Jones Industrial Average is called down 0.1%, the S&P 500 slightly higher and the Nasdaq Composite up 0.2%.
The yield on the 10-year US Treasury widened to 4.31% on Wednesday from 4.30% at the time of the London equities close on Tuesday. The 30-year yield was unmoved at 4.85%.
Sterling was down at USD1.3603 early on Wednesday afternoon, from USD1.3621 at the time of the London equities close on Tuesday. The euro fell to USD1.1603 from USD1.1621, while against the yen, the dollar bought JPY145.75, up from JPY144.84.
In London, aerospace and defence stocks shone, led by Babcock. Babcock jumped 13%, BAE Systems added 0.8% and Rolls-Royce advanced 1.9%.
Babcock said it stands to benefit from a "new era for defence", as it upped its medium-term ambitions, raised its dividend and announced a share buyback.
The aerospace, defence and nuclear engineering services company reported pretax profit of GBP329.1 million in the year to March 31, surging 52% from GBP216.7 million. Revenue was 11% higher at GBP4.83 billion from GBP4.39 billion.
At the other end of the large-cap index, WPP fell 2.3%. Barclays cut the advertising agency to 'underweight' from 'equal weight'.
Elsewhere in London, THG jumped 14%. It said it had a "much improved" second quarter in its core Beauty and Nutrition arms, as it returned to revenue growth.
The Manchester-based retail firm, behind brands such as Lookfantastic and Myprotein, said the group returned to constant currency revenue growth in the quarter "underpinned by a strong June exit rate supporting unchanged full-year 2025 guidance".
By Eric Cunha, Alliance News news editor
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