16th Sep 2025 09:01
(Alliance News) - European equities made an underwhelming start on Tuesday, while the dollar continued to drift lower on the eve of the next Federal Reserve meeting.
The FTSE 100 index fell 25.31 points, 0.3%, at 9,251.72. The FTSE 250 fell just 5.72 points at 21,640.87, and the AIM All-Share was up 1.25 points, 0.2%, at 768.64.
The Cboe UK 100 was down 0.2% at 927.16, the Cboe UK 250 was flat at 18,966.04, but the Cboe Small Companies was 0.1% lower at 17,129.48.
In Paris, the CAC 40 was 0.3% lower. In Frankfurt, the DAX 40 was 0.4% lower.
The pound rose to USD1.3642 early on Tuesday, its best level since early-July, from USD1.3597 on Monday. The euro advanced to USD1.1799 from USD1.1765, while against the yen, the buck fell to JPY146.71 from JPY147.34.
"The dollar has started the week on the softish side. This may partly involve some pre-positioning ahead of tomorrow night's Fed rate cut. But it will also be a function of the benign external environment. Here, global equity markets continue to edge higher on a cocktail of resilient business optimism and the prospect of lower core borrowing costs. News of the continuing detente in US-China relations is also helping here, as Presidents Trump and Xi appear set to talk on Friday and seal the deal regarding TikTok's future status in the US," ING analysts commented.
In Tokyo, the Nikkei 225 rose 0.3%. Financial markets had been closed in Tokyo at the start of the week. In China, the Shanghai Composite closed flat, while the Hang Seng Index was down 0.1%. In Sydney, the S&P/ASX 200 ended up 0.3%.
In New York at the start of the week, the Dow Jones Industrial Average rose 0.1%, the S&P 500 added 0.5% and the Nasdaq Composite rose 0.9%. It was another record high for the S&P and Nasdaq.
Swissquote analyst Ipek Ozkardeskaya commented: "The combination of strong earnings growth and the prospect of lower rates is simply too good for investors to jump off a running bull. On the Fed and rate cuts, many expect a total of 100 bps over the next four meetings.
"So if you think there's a mismatch between the S&P 500's outlook and the broader US economy and Fed outlook – you're not alone. That's because the S&P 500 doesn't represent the US economy. Roughly a third of the index is made up of Big Tech. Nvidia alone accounts for about 8% of the benchmark. These companies have deep pockets and support each others' business. This ecosystem, combined with global demand for US tech, has kept the major US indices – the S&P 500 and Nasdaq in particular – in demand despite signs of economic weakness elsewhere. For the rest of the S&P 500, earnings growth last quarter was around 3–4%."
The yield on the US 10-year Treasury faded to 4.03% on Tuesday morning, from 4.04% at the time of the London equities close on Monday. The yield on the 30-year Treasury was unchanged at 4.65%.
The UK unemployment rate was unmoved in July, as expected, numbers on Tuesday showed.
According to the Office for National Statistics, the nation's jobless rate was steady at 4.7% in the three months to July, where it stood for the three months to June. The reading was in line with consensus cited by FXStreet.
The ONS said an estimate showed payrolled employees declined by 142,000 on-year in July and by 6,000 on-month.
"The early estimate of payrolled employees for August 2025 decreased by 127,000 (0.4%) on the year, and by 8,000 (0.0%) on the month, to 30.3 million," the ONS added.
"The estimated number of vacancies in the UK fell by 10,000 (1.4%) on the quarter, to 728,000, in June to August 2025. This is the 38th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 9 of the 18 industry sectors."
Average growth in regular earnings during the three months, so excluding bonuses, was 4.8%, in line with consensus cited by FXStreet, cooling from 5.0% in the three months to June.
Total pay growth picked up slightly to 4.7% from 4.6%, but was in line with expectations.
Pantheon Macroeconomics analyst Rob Wood commented: "Wage growth provided a slight dovish surprise at the whole economy level, but big picture remains elevated. Private sector ex-bonus average earnings growth, which the MPC focus on more than whole-economy pay as a driver of inflation pressure, slowed to 4.7% three-months year-over-year, from 4.8% in June. But that slowdown was mainly driven by compositional effects."
A barrel of Brent fell to USD67.16 on Tuesday morning, from USD67.37 at the time of the London equities close on Monday. Gold traded at USD3,690.82 an ounce, up from USD3,668.27. The gold price hit a record high of USD3,694.18 on Tuesday.
Spurred on by the higher bullion price, Fresnillo rose 4.2%.
Budget carrier easyJet fell 2.7% as JPMorgan cut the stock to 'neutral' from 'overweight'.
Elsewhere, Kier Group surged 7.7%. The infrastructure firm said it is trading above expectations in the early stages of its new financial year.
"Building on our outperformance in FY25, the group has started the current financial year well and for FY26 is trading slightly ahead of the board's expectations," Chief Executive Officer Andrew Davies said.
Shares in recruiters fell, with SThree tumbling 24% and PageGroup and Hays falling 2.9% and 2.4% in a negative read across.
Science, technology, engineering, and mathematics-focused SThree said group net fees in the third-quarter to August 31 tumbled 12% on-year at constant currency. It noted this was a "modest sequential improvement quarter-on-quarter" amid growth in the US.
"More broadly, new business remains challenging, however, with a disciplined cost base reinforced by operational efficiencies, we remain confident in our ability to deliver on our FY25 PBT guidance. As we look further ahead, we are encouraged by pockets of improving momentum, however we have not yet seen a broader market recovery and, prudently, do not think this will start to materialise near-term, albeit not worsen," CEO Timo Lehne said.
By Eric Cunha, Alliance News news editor
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