12th Jun 2025 12:04
(Alliance News) - European stocks traded lower on Thursday, with oil majors helping shield the FTSE 100 from a larger decline, as tariff concerns and Middle East tensions hitting investor sentiment.
The FTSE 100 index traded down 10.90 points, 0.1%, at 8,853.45. The FTSE 250 was down 148.45 points, 0.7%, at 21,280.09, and the AIM All-Share fell 4.46 points, 0.6%, at 764.37.
The Cboe UK 100 was down 0.3% at 881.78, the Cboe UK 250 fell 0.9% to 18,780.59, but the Cboe Small Companies was up 0.2% at 17,029.73.
"Risk appetite in the financial markets has eased somewhat following comments by Donald Trump on Wednesday, in which he stated that his administration is preparing to set unilateral tariff rates on trading partners. The remarks tempered optimism sparked by the apparent handshake agreement reached between the US and China after two days of talks, where both sides agreed, for now, to leave tariffs unchanged. At the same time, geopolitical tensions are intensifying," ActivTrades analyst Ricardo Evangelista commented.
"Reports suggest that Israel may be preparing to launch an attack on Iran, while Russia has escalated its bombing campaign against Ukrainian cities."
The uncertain mood on Thursday supported gold prices. Gold rose to USD3,383.44 an ounce from USD3,338.63 at the time of the London equities close on Wednesday.
Simmering global tensions lifted oil, though Brent returned some loftier progress. A barrel of Brent rose to USD68.65 early Wednesday afternoon, from USD68.23 at the time of the London equities close on Wednesday. Brent had traded above the USD70 a barrel mark earlier on Thursday.
In European equities on Thursday, the CAC 40 in Paris was down 0.8% and the DAX 40 in Frankfurt slumped 1.3%.
Only a handful of blue-chips in Paris and Frankfurt traded higher, though London was more resilient, helped by BP and Shell trading 1.1% and 0.7% on the back of the more robust oil price.
China said it had issued a "certain number" of licences to export rare earths after US President Donald Trump hailed this week's deal that would see the country provide the vital elements "up front".
The economic superpowers said after talks in London that they had achieved progress in dialling down a brutal trade war that has roiled markets and threatened global supply chain chaos.
Against the dollar, sterling was at USD1.3574 on Thursday afternoon, up from USD1.3545 at the time of the London equities close on Wednesday. The euro climbed to USD1.1582 from USD1.1486. Against the yen, the dollar fell to JPY143.57 from JPY144.63.
The UK economy fell at a faster pace than expected in April, numbers on Thursday showed, as services output slumped.
According to the Office for National Statistics, the UK economy fell 0.3% in April from March. It had expanded 0.2% in March from February.
The reading for April fell short of expectations, as a smaller decline of 0.1% was expected, according to consensus cited by FXStreet.
"Payback from Q1's outsized 0.7% rise in GDP was always expected as the surge in net exports and business investment ahead of US tariffs unwound and coincided with tax and national insurance increases as well as rises in domestic energy bills," analysts at Lloyds Bank commented.
"The monthly decline in April GDP, however, was weaker than our sub-consensus estimate and provided further confirmation that Q1's strong growth outturn was highly unlikely to be repeated in Q2."
Rachel Reeves failed to rule out further UK tax rises in the autumn as new figures showed the economy shrank more than expected in April.
The chancellor has repeatedly said that the cost of Wednesday's spending review is covered by the tax rises she brought in last year, saying departments must now "live within their means".
But economists have warned that a weakening economy and additional commitments such as reversing much of the cut to winter fuel payments mean taxes are likely to go up again in the autumn.
Asked on Thursday whether she could guarantee there would be no further tax rises, Reeves told LBC: "I think it would be very risky for a chancellor to try and write future budgets in a world as uncertain as ours."
The yield on the 10-year US Treasury narrowed to 4.39% early afternoon UK time, from 4.44% at the time of the closing bell on the London Stock Exchange on Wednesday. The 30-year yield slimmed to 4.88% from 4.93%.
Thursday's economic events calendar has US producer price inflation data and initial jobless claims at 1330 BST.
Numbers from the Bureau of Labor Statistics had showed Wednesday that the US consumer price inflation rate accelerated to 2.4% in May, from 2.3% in April.
However, the reading was shy of the FXStreet cited consensus for a sharper uptick to 2.5%.
Convera analyst George Vessey commented: "The string of below-forecast inflation prints suggests consumers have yet to fully experience the effects of President Trump's tariffs, likely due to temporary tariff pauses, companies absorbing costs, or pre-emptive inventory stockpiling. However, domestic service prices, including housing, appear restrained too, hinting at consumer caution and income insecurity – offsetting any inflationary pass-through from tariffs.
"The broader impact of the trade war remains disinflationary at this stage, which, all else being equal, supports financial assets. However, anecdotal signs that corporations are preparing price hikes could keep the Fed wary, hence the rather muted reaction in equities."
In New York, the Dow Jones Industrial Average is called to open 0.7% lower, and the S&P 500 and Nasdaq Composite down 0.5%.
In London, Tesco added 2.9%, among the best large-cap performers. The Welwyn Garden City-based food retailer said sales in the 13 weeks to May 24 amounted to GBP16.38 billion, rising 5.3% on-year, or 5.5% at constant currency, and ahead of Visible Alpha consensus of GBP16.1 billion.
Like-for-like sales were 4.6% higher annually, beating Visible Alpha consensus of 3.9%, and accelerating from 4.0% growth in the fourth quarter of the prior financial year.
Elsewhere, PayPoint climbed 3.8%. The payments and retail technology group reported a 45% decline in pretax profit to GBP26.3 million for the financial year ended March 31, from GBP48.2 million a year earlier.
On an underlying basis, however, pretax profit rose 10% to GBP68.0 million from GBP61.7 million.
Revenue advanced 1.4% to GBP310.7 million from GBP306.4 million.
PayPoint added that it plans to increase its share buyback programme to return at least GBP30 million per year to shareholders, extending the scheme to the end of March 2028.
Norcros fell 3.4%. It said market conditions are "likely to remain uncertain" as it posted weaker yearly revenue and profit.
The Wilmslow, England-based supplier of bathroom and kitchen products said its pretax profit for the financial year ended March 31 fell 94% to GBP2.0 million from GBP32.6 million the prior financial year.
Revenue fell 6.1% to GBP368.1 million from GBP392.1 million.
On current trading, Norcros said revenue in the two months to the end of May was 1.8% lower than the prior year at a constant currency, like-for-like basis, adjusting for Johnson Tiles UK as well as the number of trading days in the period.
It said that market conditions "are likely to remain uncertain" as the pace of the recovery in the new build sector is not yet clear.
By Eric Cunha, Alliance News news editor
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