Further gains in the price of oil and worse-than-expected US inflation data hit risk appetite across global stock markets on Tuesday, though London’s FTSE 100 managed to erase most of its earlier losses by the close of play.
Political uncertainty at home was also weighing heavily on sentiment, as UK prime minister Keir Starmer faces growing calls for his resignation, while hopes of a peace deal between the US and Iran continued to fade following Donald Trump’s rejection of Tehran’s latest proposal.
The FTSE 100 finished just 4.11 points lower (-0.04%) at 10,265.32, after having sunk more than 1% to a low of 10,152.05 early on – a level it has not closed below in over six weeks. Losses in the telecoms and financial sectors were mostly offset by strong gains from pharma and tobacco.
Brent crude was 3.0% higher at $107.35 a barrel by the close in London, its highest in a week, as the standoff between Washington and Tehran continued. Hopes that the Iran war could be ended any time soon were dashed by Trump, who characteristically reverted to insults, calling Tehran’s latest offer “stupid”.
“I would say the ceasefire is on massive life support, where the doctor walks in and says: ‘Sir, your loved one has approximately a 1% chance of living.’,” he said on Monday.
News that US inflation accelerated to a three-year high prompted a weak start on Wall Street, with the S&P 500 and Nasdaq down 0.9% and 1.7% respectively, after the annual change in the CPI jumped from 3.3% to 3.8% in April, ahead of the 3.7% consensus estimate. The primary driver was higher energy prices due to the Middle East conflict, though even core inflation – which excludes energy and food prices – rose more than expected.
Meanwhile, back on home shores, the prime minister has reportedly faced calls to step down from senior cabinet ministers, including the Foreign Secretary Yvette Cooper, after the ruling Labour Party was battered in last week’s local council elections and a series of serious policy missteps that have eroded his popularity despite a massive parliamentary majority.
Borrowing costs shot up, with gilt yields hitting their highest level since 2008 amid the political turmoil, after Starmer effectively laid down a challenge to potential rivals to unseat him. Despite calls from nearly 80 MPs, Starmer said at a Cabinet meeting in Downing Street that he would not resign and that the process to challenge a leader had not been triggered.
Vodafone slides; Intertek surges
Telecommunications giant Vodafone posted a solid set of full-year results on Tuesday, with revenue and earnings both improving as the consolidation of Three UK and continued service‑revenue momentum underpinned performance. However, shares tanked 7% owing to a softer final quarter, while challenges remain in its key German market, according to analysts at Hargreaves Lansdowne.
Intertek surged after Swedish private equity firm EQT lifted its takeover approach for the inspection, product testing and certification group to around £9.4bn. EQT made a third and final offer for Intertek at £60 per share, up from £58 in cash. The PE firm noted that once the final dividend of 107.7p per share is included, the total value would be £61.077 per share.
Banks were also under the cosh, with Lloyds, Barclays and NatWest all lower. David Morrison, senior market analyst at Trade Nation, said: “Investors expressed uncertainty over who may end up leading the UK government, and, perhaps more importantly, who may replace Rachel Reeves as Chancellor of the Exchequer, should she be defenestrated in the fall-out.”
Imperial Brands gained as the tobacco company backed its full-year outlook and posted an uptick in first-half revenues, helping peer British American Tobacco higher.
On the FTSE 250, Greggs jumped 8% as the bakery chain held annual guidance and said like-for-like sales at the start of the year had improved but also warned that Iran war could push costs higher by the end of this year.
DIY retailer Wickes Group tanked 12% after unseasonably wet weather dampened first-quarter sales. The chain, which had 230 right-sized stores, said it remained “comfortable” with market forecasts for the full year.
Market Movers
FTSE 100 (UKX) 10,265.32 -0.04%
FTSE 250 (MCX) 22,466.20 -1.50%
techMARK (TASX) 5,894.85 -0.33%
FTSE 100 – Risers
Intertek Group (ITRK) 5,300.00p 6.43%
Compass Group 11 (CPG) 31.93p 6.09%
British American Tobacco (BATS) 4,634.00p 5.82%
Flutter Entertainment (DI) (FLTR) 7,290.00p 3.99%
Imperial Brands (IMB) 2,832.00p 3.81%
London Stock Exchange Group (LSEG) 9,348.00p 3.64%
Smith & Nephew (SN.) 1,103.00p 2.75%
GSK (GSK) 1,891.50p 2.55%
Haleon (HLN) 335.00p 2.42%
Unilever (ULVR) 4,275.50p 2.20%
FTSE 100 – Fallers
Vodafone Group (VOD) 111.95p -7.02%
3i Group (III) 2,400.00p -4.61%
Lloyds Banking Group (LLOY) 94.06p -4.35%
St James’s Place (STJ) 1,154.50p -4.35%
Marks & Spencer Group (MKS) 308.90p -4.22%
Barratt Redrow (BTRW) 252.50p -4.14%
SEGRO (SGRO) 688.80p -3.53%
Land Securities Group (LAND) 563.50p -3.34%
Barclays (BARC) 414.90p -3.31%
Melrose Industries (MRO) 482.90p -3.27%
FTSE 250 – Risers
Greggs (GRG) 1,644.00p 8.02%
Bytes Technology Group (BYIT) 332.00p 4.40%
Telecom Plus (TEP) 1,060.00p 2.51%
Oxford Nanopore Technologies (ONT) 117.90p 2.34%
Worldwide Healthcare Trust (WWH) 344.50p 2.23%
Pantheon International (PIN) 387.00p 1.98%
CVS Group (CVSG) 1,141.00p 1.97%
Bluefield Solar Income Fund Limited (BSIF) 78.00p 1.56%
Caledonia Investments (CLDN) 370.50p 1.51%
Harbour Energy (HBR) 286.00p 1.42%
FTSE 250 – Fallers
Wickes Group (WIX) 178.60p -12.02%
Trustpilot Group (TRST) 237.00p -9.20%
Ceres Power Holdings (CWR) 710.00p -6.08%
Raspberry PI Holdings (RPI) 676.00p -6.05%
Moonpig Group (MOON) 204.00p -5.64%
Vistry Group (VTY) 325.80p -5.40%
4Imprint Group (FOUR) 3,550.00p -5.03%
TBC Bank Group (TBCG) 4,392.00p -4.85%
OSB Group (OSB) 486.40p -4.81%
Trainline (TRN) 207.40p -4.42%