3rd Jun 2025 08:55
(Alliance News) - Stock prices in London opened mostly higher on Tuesday, with UK Trade Secretary Jonathan Reynolds set to meet US officials and push for a timeline for his country's exemption from tariffs.
Prime Minister Keir Starmer and Trump announced the broad terms of an agreement last month that would exempt the UK from some levies, but the details are still being worked out ahead of a formal deal.
Meanwhile, Swissquote's Ipek Ozkardeskaya said, "tensions between the US and China notched up another level, with both countries accusing each other of violating agreements and implementing discriminatory measures. It's now uncertain whether Trump and Xi will meet to talk".
The FTSE 100 index opened up 14.10 points, 0.2%, at 8,788.36. The FTSE 250 was up 24.54 points, 0.1%, at 21,053.51, and the AIM All-Share was up 1.37 points, 0.2%, at 749.50.
The Cboe UK 100 was down less than 0.1% at 873.89, the Cboe UK 250 was up less than 0.1% at 18,575.19, and the Cboe Small Companies was flat at 16,651.58.
British Gas owner Centrica led the FTSE 100, rising 3.1%. Glencore led the laggers, down 2.3%. Fellow miners Antofagasta and Rio Tinto lost 2.1% and 2.0% respectively.
British American Tobacco lost 0.5%.
The London-based cigarette and nicotine product maker raised its revenue guidance for 2025 following a better-than-expected first-half performance. It now expects top-line growth to be within a 1% to 2% range for the first half and the full-year, compared to previous estimate of just 1%.
The company said this revenue increase will likely support 1.5% to 2.5% growth in adjusted profit from operations.
Looking further ahead, BAT said it is confident in delivering growth of 3% to 5% in revenue and 4% to 6% in adjusted profit from operations in 2026.
On the FTSE 250, Chemring rose 2.1% after releasing a half-year report stating that full-year expectations were unchanged.
The Hampshire, England-based technology products and services provider reported that for the six months ended April 30, pretax profit surged 74% on-year to GBP26.5 million. Revenue rose 4.9% to GBP234.3 million, driven by strong growth in its Countermeasures & Energetics division, where sales jumped 20%.
Chemring declared an interim dividend of 2.7 pence per share, up 3.8% from 2.6p a year earlier.
In small-caps, MJ Gleeson dropped 22%.
The housebuilder expects gross margin for the year to be approximately 1% lower than previously expected. It also forecasts operating profit to be be around 15% to 20% lower than guidance.
"Looking ahead, a number of factors will continue to impact Gleeson Homes into FY2026, including planning delays which will see the business selling from fewer sites than previously forecast," MJ Gleeson added.
Dalata Hotel rose 11%.
A consortium formed by Pandox and Eiendomsspar said it has submitted a proposal to acquire the Dublin-based hotel operator, which is up for sale.
The proposal is for EUR6.05 per Dalata share, valuing the Irish firm at around EUR1.3 billion.
This represents an estimated premium of 27% to Dalata's closing price of EUR4.76 per share on March 5, and 14% to the three-month average price of EUR5.32 per share. Dalata on March 6 announced its strategic review and formal sale process.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were up 0.3%.
Trade-wise, Ozkardeskaya said that "not much progress has been made on the European front—aside from growing frustration in Brussels after the US doubled steel and aluminium tariffs to 50%, effective mid-June. Remember, the deadline for US–EU negotiations is July 9th—almost too soon to be optimistic.
"Meanwhile, tensions between the EU and China are also rising, with the EU deciding not to purchase medical equipment from China, citing 'reciprocity of purchasing.' If Europeans start playing by Trump's rules, the next four years could turn into a global nightmare."
The pound was quoted at USD1.3518 early on Tuesday in London, lower compared to USD1.3546 at the equities close on Monday. The euro stood at USD1.1417, lower against USD1.1429. Against the yen, the dollar was trading basically flat at JPY142.76 compared to JPY142.75.
"Most investors remain bearish on the US dollar, expecting continued debasement due to lacklustre growth and a Fed unwilling to offer support amid an uncertain inflation outlook," Ozkardeskaya commented. "As a result, EURUSD is consolidating gains above the 1.14 mark. The next natural target for bulls is 1.1573 - the level reached on April 21, when the dollar index also touched its 2025 low.
"The euro outlook remains positive on expectations that near-target inflation will allow the European Central Bank to deliver a comfortable 25bp cut this week - and possibly another one this summer. Euro traders will be watching closely for confirmation in today's flash CPI update for May."
She continued that "persistent inflation remains a headache for Bank of England (BoE) doves. But many economists and investors worry that the BoE has fallen behind the curve, and that fiscal measures pose a serious risk to UK growth - demanding closer attention.
"Either way, dollar weakness is the primary driver of GBPUSD, which has climbed above 1.35 and could extend gains if the greenback continues to slump, as many expect."
In Asia on Tuesday, the Nikkei 225 index in Tokyo was down 0.1%. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was up 1.4%. The S&P/ASX 200 in Sydney closed up 0.6%
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.7%.
Ozkardeskaya noted that "the S&P500 managed to shrug off trade anxieties: steel and aluminium stocks rallied on the extra tariff news, Big Tech remained in demand, and large banks cheered reports that the Trump administration may ease regulations for major lenders.
"Traders may be explicitly betting that Trump will soften his tariff stance during the 90-day pause—now dubbed the "TACO" trade (Trump Always Chickens Out)—or they may simply be ignoring the trade risks out of FOMO.
"In either case, the rally looks fragile and risks remain."
The yield on the US 10-year Treasury was quoted at 4.42%, narrowing from 4.46%. The yield on the US 30-year Treasury was quoted at 4.95%, narrowing from 5.00%.
Brent oil was quoted higher at USD65.17 a barrel early in London on Tuesday from USD64.58 late Monday.
"At its June 2 meeting, OPEC+ announced a supply increase of 411,000 barrels per day starting in July - a move that was largely anticipated by the market," commented Pepperstone's Dilin Wu. "As a result, the negative price impact was limited. More importantly, the alliance extended its voluntary output cuts of 1.7 million barrels per day - originally set to expire at the end of 2024 - through the end of 2025. This reinforced a tighter long-term supply outlook and helped cushion the market against near-term supply increases.
"The bigger catalyst, however, lies in geopolitics. The renewed escalation in the Russia-Ukraine conflict has reignited concerns over potential disruptions to energy supply chains," Wu continued. "Meanwhile, a previous proposal in the US Senate to impose a 500% tariff on countries buying Russian oil has added a fresh layer of uncertainty to global crude trade dynamics.
"These geopolitical developments are playing a far more direct role in driving prices higher."
Gold was quoted lower at USD3,355.99 an ounce against USD3,371.47.
"Gold is currently experiencing notable volatility, with prices touching levels near USD3,400 per ounce before retreating slightly at the start of trading on Tuesday," said XS.com's Rania Gule. "This pullback does not necessarily reflect a weakening of bullish momentum, but rather a short technical pause in an overall upward trajectory still fueled by several key factors, most notably escalating trade tensions, geopolitical developments, and potential shifts in US Federal Reserve policy...The pivotal event sparking fresh market anxiety was [Trump's] announcement of plans to double tariffs on steel and aluminium imports to 50%, a move that has reignited fears of a full-blown trade war with China and potentially other trading partners.
"Markets are not only reacting to the numbers but also to the political messaging behind such actions—this is where the real risk lies."
Still to come on Tuesday's economic calendar, the docket includes eurozone CPI, South Africa's GDP and the US Redbook index.
By Emma Curzon, Alliance News reporter
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