20th May 2025 08:41
(Alliance News) - European equities opened higher on Tuesday, as worries stemming from a US credit rating downgrade ebbed, leading to largely stronger trading in Asia and on Wall Street overnight.
The FTSE 100 index opened up 22.87 points, 0.3%, at 8,722.18. The FTSE 250 was up 47.89 points, 0.2%, at 21,008.98, and the AIM All-Share was down 0.56 of a point, 0.1%, at 733.00.
The Cboe UK 100 was up 0.5% at 870.98, the Cboe UK 250 was 0.3% higher at 18,356.41, and the Cboe Small Companies was flat at 15,908.23.
In Paris, the CAC 40 rose 0.2%, while Frankfurt's DAX 40 added 0.1%.
The yield on the US 10-year Treasury was quoted at 4.43% early Tuesday UK time, narrowing from 4.49% at the time of the London equities close on Monday. The yield on the US 30-year Treasury slimmed to 4.89% from 4.96%.
In New York, the Dow Jones Industrial Average rose 0.3% on Monday, the S&P 500 ended 0.1% higher and the Nasdaq Composite edged up slightly.
"Yesterday felt like we were somewhere along the line of a 'death by a thousand cuts' with regards to the US fiscal situation. Hard to know where in that thousand we are but probably much nearer a thousand than at zero even as yesterday saw an initial sell off reverse as the session went on. At the end of the day the loss of the final US triple-A rating late on Friday night doesn't change anything much immediately but it keeps the drip, drip, drip of poor fiscal news building up against the debt sustainability dam in the background," analysts at Deutsche Bank commented.
Moody's Ratings late Friday downgraded the US long-term issuer and senior unsecured ratings to Aa1 from Aaa and changed the outlook to stable from negative.
Gold slipped to USD3,215.12 an ounce early Tuesday from USD3,233.73 at the time of the London equities close on Monday. A barrel of Brent bought USD65.11, fading from USD65.41.
In Tokyo, the Nikkei 225 added 0.1%. Sydney's S&P/ASX 200 ended up 0.6%. In China, the Shanghai Composite rose 0.4%. The Hang Seng Index in Hong Kong surged 1.5%.
China's central bank on Tuesday cut two key interest rates to historic lows, as Beijing battles to stimulate its economy amid see-saw trade tensions with the US.
The People's Bank of China said Tuesday that the one-year loan prime rate, the benchmark for the most advantageous rates lenders can offer to businesses and households, would be cut to 3.00% from 3.10%.
The five-year LPR, the benchmark for mortgage loans, was cut to 3.50% from 3.60%.
Both rates were last cut in October to what were then record lows.
Australia's central bank has cut its key interest rate for the second time this year. The Reserve Bank of Australia has lowered its cash rate target by 25 basis points to 3.85%, down from 4.10%.
This marks the first rate cut since February, when the RBA also trimmed the rate by 25 basis points.
RBA commented: "Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Data on inflation for the March quarter provided further evidence that inflation continues to ease.
"With inflation expected to remain around target, the board therefore judged that an easing in monetary policy at this meeting was appropriate. The board assesses that this move will make monetary policy somewhat less restrictive. It nevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply."
Elsewhere on the monetary policy front, the Bank of England's Huw Pill is due to speak at 0900 BST.
ING analyst Chris Turner commented: "As a chief economist, it was rare to see that he dissented from last week's BoE decision to cut rates. Unless he's turned substantially more dovish over the last week (unlikely), sterling faces some upside risk from his comments today."
Sterling rose to USD1.3384 on Tuesday morning, from USD1.3365 at the time of the London equities close on Monday. The euro was higher at USD1.1271 from USD1.1254. Against the yen, the dollar faded to JPY144.26 from JPY144.85.
In London, Diploma was the star FTSE 100 performer. It jumped 14% on a guidance raise. The supplier of specialised technical products and services said pretax profit in the half-year to March 31 surged 57% to GBP122.3 million from GBP77.8 million a year earlier.
Revenue climbed 14% to GBP728.5 million from GBP638.3 million, with organic revenue picking up to 9% from 5% a year prior.
Diploma now expects full-year organic revenue growth of 8%, its guidance lifted from 6%, and an operation margin of around 22%, the outlook upped from roughly 21%.
DIY retailer Kingfisher fell 1.9%. Barclays cut the B&Q owner to 'underweight' from 'equal-weight'.
Greggs added 5.8%. The baker said total sales in the first 20 weeks of the year rose 7.4% annually to GBP784 million. Like-for-like sales were 2.9% higher, with an "improved performance in the last 11 weeks supported by better trading conditions".
It said "product innovation" has played a part in its sales rise. The FTSE 250 listing hailed its over-ice drinks range, which includes iced tea and lemonade. It also said "pizza boxes continue to see strong demand".
Among some of its "classic product ranges", there have also been some more "innovation".
"We have made recipe enhancements to our sandwich range in recent weeks, as well as introducing a new feta, red pepper and spinach bake to our iconic savoury range," it added.
Topps Tiles rose 3.1%. The tiler seller reported an "improving sales trend" in its first half, and said the second half has started strongly.
For the 26 weeks to March 29, it swung to a pretax profit of GBP1.9 million from a loss of GBP1.5 million. Revenue shot up 16% to GBP142.9 million from GBP122.8 million.
"As we look forward to the second half, current trading shows a strong improvement in both our market leading omni-channel business, Topps Tiles, and also in the newer parts of the Group; and we have a clear plan to move CTD into profitability by the final quarter of our financial year and into growth beyond that. As a result, we expect our full year profits to show a meaningful improvement over the prior year," Chief Executive Rob Parker said.
By Eric Cunha, Alliance News news editor
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