7th May 2025 08:52
(Alliance News) - London's FTSE 100 gave back a fraction of its recent progress early Wednesday, despite some optimism on the tariff front, ahead of a US interest rate decision later.
Treasury Secretary Scott Bessent told Fox News that he and US Trade Representative Jamieson Greer will meet Chinese Vice Premier He Lifeng to lay the groundwork for future negotiations.
"We will agree what we're going to talk about. My sense is that this will be about de-escalation, not about the big trade deal," Bessent told "The Ingraham Angle" show.
"We've got to de-escalate before we can move forward."
The FTSE 100 index opened down 9.28 points, 0.1%, at 8,588.14. It came into Wednesday on a 16-day winning streak. The FTSE 250 lost 87.50 points, 0.4%, at 20,264.99, and the AIM All-Share edged down 0.62 of a point, 0.1% at 709.72.
The Cboe UK 100 was down 0.2% at 855.23, the Cboe UK 250 also shed 0.2% at 17,807.89, and the Cboe Small Companies was flat at 15,590.89.
In Paris, the CAC 40 fell 0.5%, though the DAX 40 in Frankfurt added 0.1%.
Against the dollar, the pound fell to USD1.3351 on Wednesday morning from USD1.3368 at the time of the London equities close on Tuesday. The euro, however, perked up to USD1.1362 from USD1.1348. Versus the yen, the dollar rose to JPY143.15 from JPY142.86.
SPI Asset Management analyst Stephen Innes commented: "Today, the FX market gets a double dose of US macro theatre: first up is Treasury Secretary Scott Bessent's congressional testimony at 10:10 [Eastern Time] on the 'State of the International Financial System'. Expect boilerplate talk about orderly bond markets and a strong dollar stance. But what'll really matter is if he's pushed on currency manipulation in the current trade framework. With USD under pressure, there's chatter about Mar-a-Lago-style diplomacy pushing Asia to strengthen its FX. Any off-script slip from Bessent on this front could be a dollar-negative event. However, the US Treasury's tolerance for additional broad-based USD weakness remains uncertain, especially ahead of absorbing tariff-induced inflationary pressures. Perhaps we'll find out tonight.
"Then comes the FOMC. Expectations are low - Powell is expected to deliver a polished version of 'we're on hold, watching the data'. The stronger April NFP pushed July back into focus as the likely start of the Fed's next easing cycle, and markets have already walked back ~20bps from the peak cut pricing. But here's the kicker: if the Fed is no longer pushing dovish surprises, why isn't the dollar stronger? Bottom line: Dollar strength is being rationed. Trade talks are a net positive, but the market's trust in US policy clarity is still broken. Until that chaos gap closes - or hard data collapses and rate cut pricing explodes - expect more of this range-bound, whiplash-prone FX tape."
The UK and the US are close to agreeing a trade pact that would cushion the impact of Donald Trump's "liberation day" tariffs by granting lower-tariff quotas for UK steel and car exports, the Financial Times on Tuesday said.
Citing officials in London and Washington, the FT said the deal, set to be signed this week, is due to include quotas that spare some UK exports from the full brunt of the additional 25% tariffs that Trump levied on steel and car imports in February and March.
UK trade negotiators returned to Washington this week for the final stages of negotiations, which one senior UK official told the FT were continuing "at speed", cautioning that disagreements remain over pharmaceuticals.
Shares in drugmakers GSK and AstraZeneca were down 4.3% and 2.3% early Wednesday in London.
As well as offering quotas for UK exports, the UK is also hoping to secure reductions in the sector specific 25% tariffs that Trump has levied on steel and autos.
The UK's "offers" include concessions to Washington on the digital services tax levied on international tech companies, cuts on tariffs imposed on US auto exports, and a reduction of tariffs on US agricultural products, the FT said.
In New York on Tuesday, the Dow Jones Industrial Average fell 1.0%, the S&P 500 gave back 0.8% and the Nasdaq Composite lost 0.9%.
Financial markets in Tokyo re-opened. The Nikkei 225 lost 0.1%. The Shanghai Composite added 0.8%, while the Hang Seng Index in Hong Kong was up 0.6% in late trade. In Sydney, the S&P/ASX 200 rose 0.3%.
A barrel of Brent traded at USD62.88 early Wednesday, rising from USD62.58 late Tuesday. Gold fell to USD3,391.39 an ounce from USD3,396.32.
In London, Diageo shares rose 1.5%. JPMorgan placed the brewer on 'positive catalyst watch'.
Trainline shed 7.8%. It reported an annual earnings hike but predicts growth will slow in its new financial year, as the rail ticketing platform grapples with "some headwinds".
Trainline said pretax profit in the year to February 28 surged 68% to GBP80.9 million from GBP48.1 million. Revenue was 11% higher at GBP442.1 million from GBP396.7 million. Net ticket sales shot up 12% to GBP5.91 billion, Trainline said.
It recorded adjusted earnings before interest, tax, depreciation and amortisation of GBP159 million, a rise of 30%.
"Our sustained investment in tech innovation over the last three decades is delivering for customers, driving industry growth and is reflected in our performance with net ticket sales up 12% year-on-year to GBP6 billion. Spain offers a powerful blueprint for Europe, where net ticket sales have nearly tripled in two years. Looking ahead, liberalised routes across Europe will be worth EUR12 billion by 2030, almost three times their size today. In the UK we remain the number one travel app and continue to innovate, including leveraging AI, to shift more people towards greener, digital-first rail travel, which now represents over 50% of industry ticket sales," CEO Jody Ford said.
Trainline said it has "significant long term growth opportunities".
The firm added: "While the group remains focused on its long-term growth priorities, in FY2026 we expect some headwinds as previously announced. These include Transport for London's phased expansion of their contactless travel zone and the ongoing impact from Google's changes to its search engine results page. In addition, recent global macroeconomic uncertainty may impact foreign travel."
As a result, Trainline expects net ticket sales growth in the range of 6% to 9% for financial 2026, a slowdown from the year just ended. What's more, it predicts revenue growth to be slower than net ticket sales. Trainline predicts a revenue outcome for the new year that ranges from flat, to a 3% rise.
"Despite that, we expect adjusted Ebitda to grow broadly in line with net ticket sales, at a rate of 6% to 9%, as we benefit from operating leverage and our cost optimisation exercise," it added.
Gulf Marine Services added 6.4%. The provider of self-propelled and self-elevating support vessels for the offshore energy sector said first-quarter revenue has risen 14% to USD42.3 million from USD37.1 million.
Its adjusted Ebitda has shot up 21% to USD25.6 million from USD21.2 million.
"Adjusted Ebitda guidance for 2025 remains in the range of USD100-108 million. As for 2026, and while we are still closely monitoring the global economic news, we are targeting an Ebitda in the range of USD105-115 million," Gulf Marine said.
Still to come on Wednesday is a UK construction purchasing managers' index reading at 0930 BST, before eurozone retail sales data at 1000 BST. The Fed decision is at 1900 BST.
By Eric Cunha, Alliance News news editor
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