11th Jun 2025 08:46
(Alliance News) - European equities opened in a solid fashion on Wednesday, with news of a US and China "framework" after talks in London lifting the mood.
The FTSE 100 index opened up 11.84 points, 0.1%, at 8,864.92. The FTSE 250 was up 44.46 points, 0.2%, at 21,433.92, and the AIM All-Share was up 0.90 of a point, 0.1%, at 767.22.
The Cboe UK 100 was flat at 883.44, the Cboe UK 250 added 0.2% at 18,932.86, and the Cboe Small Companies was down 0.1% at 16,898.58.
In European equities on Wednesday, the CAC 40 in Paris was up 0.3% and the DAX 40 in Frankfurt added 0.2%.
Top officials from the US and China said Tuesday they had agreed on a "framework" to move forward on trade, after two days of high-level talks in London to resolve tensions.
US Commerce Secretary Howard Lutnick expressed optimism that concerns surrounding rare earth minerals and magnets "will be resolved" as the deal is implemented.
But the framework will need to be approved by leaders in Washington and Beijing, officials said after a full day of talks at the UK capital's historic Lancaster House.
In Tokyo on Wednesday, the Nikkei 225 ended 0.6% higher. In China, the Shanghai Composite rose 0.5%, while the Hang Seng Index in Hong Kong traded 0.8% higher. In Sydney, the S&P/ASX 200 ended up 0.1%.
In New York on Tuesday, the Dow Jones Industrial Average rose 0.3%, while the S&P 500 and Nasdaq Composite each rose 0.6%.
Sterling fell to USD1.3474 early Wednesday, from USD1.3509 at the time of the London equities close on Tuesday. The euro traded at USD1.1412, down from USD1.1418. Against the yen, the dollar advanced to JPY145.16 from JPY144.93.
ING analysts commented: "This week hasn't shown a clear direction for the dollar so far. Uncertainty around how far-reaching the US-China trade talks in London will be has left room for domestic factors to shape relative performance across G10 currencies.
"From a market sentiment standpoint, this feels like a positive step toward de-escalation, but not a major breakthrough. China's refusal to commit to reducing its trade deficit still leaves plenty of ammo for trade hawks in Washington to resist any structural easing."
ING analysts continued: "A soft 3-year Treasury auction reversed some recent gains in US government bonds, which now face a dual test today with the highly watched 10-year auction and CPI data."
The yield on the US 10-year Treasury was at 4.49% early Wednesday, widening from 4.48% at the London equities close on Tuesday. The 30-year yield stretched to 4.96% from 4.95%.
Wednesday's global economic calendar has the US inflation reading at 1330 BST. According to consensus cited by FXStreet, the pace of consumer price inflation is expected to have accelerated to 2.5% in May from 2.3% in April.
Also on Wednesday, UK Chancellor Rachel Reeves will set out government spending plans. The announcement will be around 1230 BST.
The review, which will set out day-to-day spending plans for the next three years and capital spending plans for the next four, is expected to see boosts for the NHS, defence and schools.
XTB analyst Kathleen Brooks commented: "This much-hyped event will see the chancellor allocate GBP600 billion of public funding later today, which is one quarter of the UK economy.
"While we know where the vast amount of money will be allocated ahead of this speech, what we don't know is where the savings will come from? The spending review has been touted as one of the biggest ever Treasury exercises, going line by line through government departments budgets to look for inefficiencies and elimination of waste. If the chancellor cannot convince the market that she is serious about getting the UK's finances on a good footing, then the UK Gilt market may give back some of Tuesday's gains, and bond yields could rise, which may weigh on sterling."
Brooks added: "From a stock market perspective, we think that this spending review will reinforce defence firms, which have been the top performers in the FTSE 100 so far this year. The FTSE 250 has been driven by banks and home builders so far this year. The government is expected to release more funds for homebuilding. This could also keep the homebuilders buoyant, while the short-term outcome for banks could depend on how bond markets react to the review. Considering the chancellor has left little room for surprises, the UK bond market could absorb the spending review well, in our view."
Ahead of the spending review, BAE was down 0.4% in early trade, though Rolls-Royce traded 0.8% higher.
Among FTSE 250s, housebuilder Bellway was up 2.3%, extending gains after a 7.9% advance on Tuesday.
Ibstock slumped 14%. The building products supplier said a "more competitive market backdrop" has meant it has struggled to pass on the impact of cost inflation to customers.
Ibstock said "average selling prices have been adversely impacted by sales mix".
"This, combined with a more competitive market backdrop, has made passing on the full impact of cost inflation more challenging. Overall, based on both sales mix and absolute pricing levels, we expect sales prices in both clay and concrete in the first half of 2025 to be broadly in line with the comparative period," it said.
It now expects its 2025 adjusted earnings before interest, tax, depreciation and amortisation to be in the range of GBP77 million to GBP82 million, between a 2.5% fall and a 3.8% rise from GBP79 million in 2024.
Ibstock expects first half sales volumes in its core business "to be materially above the prior year level".
Chief Executive Officer Joe Hudson said: "Despite ongoing uncertainty, we are encouraged by signs of recovery in the UK housing market. As such, we remain committed to taking steps to ensure we are well placed to support customers and benefit from the recovery as it gathers pace. Notwithstanding the margin headwinds encountered in 2025, we remain confident that our recent actions alongside our strategic investments leave us well positioned as activity levels continue to pick up."
Elsewhere, there was a slew of M&A updates for investors to take stock of.
Assura advanced 2.0% as it backed a GBP1.70 billion offer from a KKR-led private equity consortium. Fellow London listing Primary Health Properties had been in pole position to acquire the healthcare facilities investor. Primary Health shares were up 1.6%.
Ricardo jumped 25% as it agreed to a GBP281 million cash buyout from consultancy firm WSP Global. Science Group, an investor in Ricardo which has recently pushed for changes at the environmental and engineering consultancy, shot up 13%.
On the decline, analytics company GlobalData fell 15%, while software solutions provider Craneware added 0.8%. Both their respective suitors decided against making bids.
A barrel of Brent fell to USD66.96 on Wednesday morning, from USD67.82 at the time of the closing bell on the London Stock Exchange on Tuesday. Gold fetched USD3,338.42 an ounce, up from USD3,325.36.
By Eric Cunha, Alliance News news editor
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