9th Jul 2025 12:03
(Alliance News) - Stock prices in Europe pushed higher on Wednesday, aided by optimism that the EU can strike a trade agreement with the US and avoid lofty tariffs.
The EU wants to strike a deal with the US "in the coming days" to avoid sweeping tariffs, a spokesman said Wednesday.
"The US has moved its deadline for finalising deals with partner countries to the first of August. However, we aim to reach a deal before then, potentially even in the coming days, we have shown our readiness to reach an agreement in principle," EU trade spokesman Olof Gill said.
The FTSE 100 index rose 29.03 points, 0.3%, to 8,883.21. The FTSE 250 was up 26.31 points, 0.1%, at 21,607.99, but the AIM All-Share was down 2.33 points, 0.3%, at 773.17.
The Cboe UK 100 was up 0.5% at 885.91, the Cboe UK 250 rose 0.1% to 19,106.76, and the Cboe Small Companies gave back 0.1% to 17,569.02.
In European equities on Wednesday, the CAC 40 in Paris jumped 1.2%, while the DAX 40 in Frankfurt surged 1.1%. Only a handful of blue-chips in Paris and Frankfurt traded lower.
Germany's Chancellor Friedrich Merz said Wednesday he was "cautiously optimistic" about the prospects of a deal between the EU and the US to avert increased tariffs threatened by President Donald Trump.
"I am cautiously optimistic that we may succeed in reaching an agreement with the US in the next few days or at the latest by the end of the month," Merz told parliament.
Rostro analyst Joshua Mahony said investors a positioning "themselves in anticipation of a potential breakthrough in trade talks between the US and EU".
"German Chancellor Merz provided one such voice, noting that he is cautiously optimistic thanks to ongoing intensive contact with the US government. However, whilst there is a potential framework for a deal being put together, the apparent US insistence of a 17% tariff on EU agricultural goods does provide a potential roadblock going forward. This is where it becomes difficult to please all parties, as the priorities of the German (autos) will be very different to the French (agri)," the analyst added.
The yield on the US 10-year Treasury was quoted at 4.41% early Wednesday afternoon, slimming from 4.42%, where it stood at the time of the London equities close on Tuesday. The yield on the US 30-year Treasury was quoted at 4.93%, easing from 4.96%.
Stocks in New York are called to open higher. The Dow Jones Industrial Average is called up 0.2%, and the S&P 500 and Nasdaq Composite up 0.1%.
President Trump said Tuesday that he would not extend an August 1 deadline for higher US tariffs to take effect on dozens of economies, while announcing plans for a 50% duty on copper imports.
"That's a shift in tone from Trump's own comments on Monday evening, as Trump had said that the August 1 date was "not 100% firm", and investors had been hopeful that ongoing negotiations and trade deals could avoid that. So it's a clear hardening up of the rhetoric," analysts at Deutsche Bank commented.
"In addition, the president took a more hawkish tone, indicating that some countries would be seeing a 60% or 70% tariff rate and that sectoral tariffs are coming."
Trump also said Washington would soon make an announcement on pharmaceuticals, but officials would allow manufacturers time to relocate their operations into the country.
"We're going to give people about a year, a year and a half to come in, and after that, they're going to be tariffed," he said. "They're going to be tariffed at a very, very high rate, like 200%."
Apart from copper and pharmaceuticals, Trump has ordered probes into imports of lumber, semiconductors and critical minerals that could lead to further levies.
Rostro's Mahony added: "With roughly half of US copper coming from abroad, there is a clear desire to remove this dependency."
In London, Glencore was down 2.6%, Anglo American shed 2.2%, while Antofagasta fell 1.6%.
WPP was the worst FTSE 100 performer, however, slumping 17%. The advertising firm cut guidance following a tricky first half. WPP now expects a 2025 like-for-like revenue decline, excluding pass through costs, between 3% and 5%. It predicts a decline in headline operating profit margin of 50 to 175 basis points, excluding foreign exchange.
It also sees "continued macro uncertainty weighing on client spend" going forward.
The pound rose to USD1.3586 early Wednesday afternoon, from USD1.3574 at the time of the London equities close on Tuesday. The euro fell to USD1.1704 from USD1.1709 while against the yen, the dollar fell to JPY146.61 from JPY146.82.
Trade tariffs could increase the risk of some businesses falling behind on loans, while a high proportion of the UK workforce is in sectors more exposed to global shocks, the Bank of England has warned.
Households and businesses nonetheless remain resilient, and the UK banking system is equipped to support them even if conditions significantly worsen, the Bank's Financial Policy Committee, FPC, said in its latest report.
The FPC said there was a high degree of unpredictability about how global trade will evolve, with US President Donald Trump hiking tariff rates in April but negotiations with other countries over possible trade deals ongoing.
Conflict in the Middle East has also raised the risk of energy prices spiking, particularly if the supply of oil and gas were disrupted, it found.
However, the FPC concluded that despite pockets of vulnerability, UK businesses would typically be able to pay their debts even in the face of further global volatility such as lower demand and supply.
Furthermore, the report found that the UK banking system has the capacity to support households and businesses even if economic and business conditions became substantially worse than expected.
A barrel of Brent traded at USD69.85 midday Wednesday, flat from USD69.87 late Tuesday afternoon. Gold fell to USD3,295.22 an ounce from USD3,297.61.
Back in London, Galliford Try rose 3.2%. It expects to report a full-year performance ahead of forecasts.
The construction company predicted revenue and adjusted pretax profit ahead of the current market forecasts for the year ended June 30. It puts the consensus range for revenue between GBP1.86 billion and GBP1.89 billion, and the profit range between GBP40.1 million and GBP41.6 million.
"I am delighted that all our operations continued to perform strongly throughout the second half of the year and we expect to report another year of increased revenue and profit in September," CEO Bill Hocking said.
Over in Paris, EssilorLuxottica was on the rise, surging 5.9%. Meta Platforms has snapped up a roughly 3% stake in Ray-Ban maker, Bloomberg reported on Tuesday.
Meta has bought a stake worth roughly EUR3 billion, now owning just under 3% of Paris-listed EssilorLuxottica. Bloomberg cited people familiar with the matter.
The sources said Menlo Park, California-based Meta could build its stake to around 5%.
The duo currently team for the Meta AI range of products, which include Ray-Ban and Oakley smart glasses.
Still to come on Wednesday, minutes from the Federal Reserve's most recent meeting are released at 1900 BST.
"Tonight's minutes could tilt sentiment if they reveal more dovish consensus than currently priced," SPI Asset Management analyst Stephen Innes commented.
By Eric Cunha, Alliance News news editor
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