8th Sep 2026 09:01
(Alliance News) - European equities made an underwhelming start on Tuesday, with trade policy concerns and inflationary worries at the fore.
The FTSE 100 index opened down 10.00 points, 0.1%, at 10,812.13. The FTSE 250 fell 76.21 points, 0.3%, at 24,430.47, and the AIM all-share fell 2.17 points, 0.3%, at 796.96.
The Cboe UK 100 was down 0.1% at 1,074.64, the Cboe UK 250 was down 0.5% at 21,202.18, and the Cboe small companies was down 0.1% at 18,743.68.
The CAC 40 in Paris lost 0.4%, while Frankfurt's DAX 40 fell 0.3%.
"Trade tensions and geopolitical stalemate are adding to inflationary concerns – pushing prices up across a large basket of commodities, which will feed through to household and business costs. The moves are adding to the note of caution reverberating on financial markets, as investors assess the likelihood that interest rates may have to stay higher for longer to keep a lid on consumer prices," Wealth Club analyst Susannah Streeter commented.
"Tariff wars have reared up again after Canada slapped billions of dollars of retaliatory tariffs on American goods, after talks with the US administration collapsed. The former trade allies have turned foes, with President Trump turning up the heat, and the latest measures are likely to add another layer of uncertainty for businesses and consumers. Canada's retaliatory tariffs on around USD20 billion of US goods came into effect today, with duties ranging from 15% to 50%."
Meanwhile, Brent was on the cusp of the USD99 a barrel level, spiking to its loftiest level since July.
A barrel of Brent fetched USD98.63 on Tuesday morning, up from USD97.89 at the time of the London equities close on Monday.
Strikes on Saudi Arabia by Yemen's Iran-backed Houthi rebels wounded 73 people, a Riyadh-led coalition said Tuesday, vowing to respond to the attacks.
The Houthis launched a broad offensive along frontlines on the western Red Sea coast in a bid to advance towards the Bab al-Mandab Strait, experts say.
The waterway forms the southern entrance to the Red Sea, a shipping artery that has become vital for Saudi oil exports during Tehran's blockade of the Strait of Hormuz since the start of the US-Iran war on Iran.
Deutsche Bank analysts commented: "And there was no sign of respite on the gas front either, with European natural gas futures also rising back to EUR73.34 [megawatt hours]. So that exacerbated fears about European inflation."
Deutsche's analysts noted a rise in European government bond yields accompanied the inflation worries.
"That rise in yields came as traders grew increasingly confident in future ECB rate hikes this year. In fact, investors were pricing 48bps of further hikes by the ECB's December meeting at the close, up +2bps on the day. And as a reminder, our own European economics team also revised their ECB forecasts last week, so they expect the ECB to hike this week, and follow that up with another hike at the December meeting," Deutsche analysts added.
The ECB decision is on Thursday. On Friday, the Federal Reserve moves into focus due to a US inflation reading which could cement a rate hike next. The Fed's rate decision is next week Wednesday.
The yield on the US 10-year Treasury was quoted at 4.80%, widening from 4.78% at the time of the London equities close on Friday. The yield on the US 30-year Treasury stretched to 5.27% from 5.24%.
Financial markets in New York were closed on Monday.
Sterling traded at USD1.3535 on Tuesday morning, rising from USD1.3516 at the time of the London equities close on Monday. Versus the euro, it climbed to EUR1.1649 from EUR1.1638.
The single currency traded at USD1.1614, fading from USD1.1629. Against the yen, the dollar declined to JPY153.92 from JPY154.33. It traded as low as JPY152.89 on Tuesday.
ING analyst Francesco Pesole commented: "Yen moves have continued to dominate the start of the week. Thin liquidity due to the US holiday likely amplified yesterday's USD/JPY sell-off, pushing the pair through the key 155.0 level before extending to 153.0 overnight. This still looks primarily like a JPY story rather than evidence of a broader shift in sentiment towards the dollar.
"Despite short-term fundamentals suggesting the move is overdone, it remains risky to stand in its way, particularly given the scope for further carry trade unwinding. The next meaningful support only comes in at 152.0, where the yen rally stalled in January and February. A break below that could quickly open the way towards 150.0. Whether such a move would prove sustainable if the Fed hikes next week remains an open question, but current volatility argues against trying to catch the falling knife."
In Tokyo, the Nikkei 225 closed down 1.7%, after a sharp afternoon slump. In China, the Shanghai Composite added 0.2%, while the Hang Seng Index in Hong Kong was down 0.3% in late trade. In Sydney, the S&P/ASX 200 was down 1.0%.
An ounce of gold fell to USD4,397.02 on Tuesday from USD4,412.10 at the time of the London equities close on Monday.
In London, Computacenter was the best FTSE 100 performer, adding 3.8% on the back of a guidance raise.
For the whole of 2026, it now expects adjusted pretax profit "significantly ahead of current market expectations" and "no less than GBP380 million". It puts consensus at GBP340.9 million. Adjusted pretax profit in 2025 amounted to GBP272.0 million.
"Computacenter delivered a record first half, significantly ahead of our expectations at the start of the year, as we converted strong and growing customer demand for digital infrastructure into substantial revenue, gross profit and operating profit growth," Chief Executive Officer Mike Norris said.
Autotrader rose 3.6% after Jefferies raised the stock to 'buy' from 'hold'.
Elsewhere, Dunelm slumped 10%. It reported steady annual profit, a slight revenue rise and the homewares retailer set out a three-year growth plan.
The plan will see the firm "saving to invest", by removing some GBP100 million of unproductive costs by financial 2029.
In the year ended June 27, pretax profit was flat at GBP211.0 million, though total sales edged up 3.1% to GBP1.83 billion from GBP1.77 billion.
The plan, dubbed 'winning hearts & homes', aims for "a return to sustainable mid-to-high single digit sales growth".
On AIM, exploration and development company 80 Mile jumped 10% as it agreed indicative terms for a tie-up with Greenland Energy. Greenland Energy is focused on the exploration and development of the Jameson Land Basin in East Greenland. 80 Mile said this is "one of the world's largest undrilled onshore hydrocarbon basins".
The deal values 80 Mile shares at 1.1 pence each, a 43% premium to its closing share price on September 3, the last trading day before deal terms were agreed.
80 Miles shareholders will receive 0.01108 of a new Greenland Energy for each 80 Mile share owned.
It values 80 Mile's existing issued share capital as a whole at GBP61.5 million.
By Eric Cunha, Alliance News news editor
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