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Stocks in Europe were mostly lower at Tuesday midday, as UK government bond yields spiked after official data showed an increase in UK public sector borrowing, with shares of banks and housebuilders falling. The FTSE 100 index was up 3.08 points at 9,016.07. The FTSE 250 was down 117.42 points, 0.5%, at 21,895.04, and the AIM All-Share was down 2.44 points, 0.3%, at 768.44. The Cboe UK 100 was up 0.1% at 899.49, the Cboe UK 250 was down 0.5% at 19,243.88, and the Cboe Small Companies was down 0.1% at 17,670.84. In European equities on Tuesday, the CAC 40 in Paris fell 0.7%, while the DAX 40 in Frankfurt faded 1.0%. UK government bond yields spiked on Tuesday as another poor batch of data laid bare the precarious footing the nation’s public finances are on. Debt costs are a reason for another higher than expected borrowing figure, which are becoming customary themes during the monthly data. According to the Office for National Statistics, public sector borrowing totalled £20.68 billion in June, exceeding an FXStreet-cited consensus for £15.6 billion and up from £17.44 billion in May. It was the second-highest June borrowing since monthly records began in 1993, after that of June 2020, the ONS noted. It was also more than the £17.1 billion forecast by the Office for Budget Responsibility in March. ‘Ten-year gilt yields briefly nudged up to 4.645%, which is the market’s way of saying it isn’t impressed with the state of public finances. Soaring debt interest payments haven’t helped and the situation will further stir speculation that the government will have to put up taxes in the Autumn Budget,’ commented AJ Bell analyst Russ Mould. ‘Housebuilders were knocked by the public sector finance figures as the rise in gilt yields suggests the market believes interest rates could stay higher for longer. Housebuilders are desperately waiting for rates to come down as that could make mortgages more affordable and help more people get on the property ladder.’ Vistry shed 2.9%, Barratt Redrow lost 2.3%, Taylor Wimpey was down 1.6%, and Bellway fell 1.4%. Mould continued: ‘Banks also fell on the news as the prospect of a tax hike is negative for consumer and business sentiment, potentially leading to more hesitance around borrowing money.’ Barclays declined 1.0%, Lloyds Banking was down 0.9%, NatWest faded 0.4%, while HSBC was up 0.3% after opening the red. The pound was quoted lower at $1.3491 at midday on Tuesday in London, compared to $1.3506 at the equities close on Monday. The euro also stood lower, at $1.1704 against $1.1711. Against the yen, the dollar was trading up at JP¥147.47 compared to JP¥147.29. Compass led the FTSE 100 around midday, up 6.0%. The Chertsey, England-based contract caterer announced the expansion of its European business with the €1.5 billion acquisition of premium food services business Vermaat Groep BV. The takeover is expected to be margin and earnings per share accretive in the first full year of ownership. In addition, Compass reported organic revenue of 8.6% in the three months to June 30, the financial third quarter, and 8.5% for the financial year to date. As a result, Compass raised 2025 guidance. ‘We now expect constant currency underlying operating profit growth to be towards 11%, driven by organic revenue growth above 8% and ongoing margin progression,’ the firm said. In the financial year that ended September 30, 2024, Compass reported underlying operating profit of $3.00 billion, up 16% from $2.58 billion year-on-year. Greencore also upped its full-year outlook, sending it to the top spot on the FTSE 250, up 11%. The Dublin-based convenience foods maker now anticipates financial 2025 adjusted operating profit will be in a range of £118 million to £121 million, ahead of previous guidance of £114 million to £117 million. At the top-end of guidance this would be 21% ahead of £97.5 million posted in the 52 weeks to September 27, 2024. This followed good weather and new business wins boosting sales during the financial third quarter. Revenue increased 9.9% to £511.1 million in the 13 weeks to June 27. At the other end, Kier Group slipped 5.1%. The Salford, England-based infrastructure services said its Chief Executive Officer Andrew Davies will retire on October 31, as the group reported a record order book. Davies will be succeeded the following day by Stuart Togwell, currently group managing director of Construction. Both revenue and profit for the year that ended June 30 are expected to be in line with the board’s expectations. The group cited strong operational performance across divisions, highlighting growth in its Water business and key project completions in its Property unit. The order book climbed to around £11.0 billion, up from £10.8 billion a year earlier. Kier said it has already secured 88% of forecast revenue for financial 2026. Stocks in New York were called lower. The Dow Jones Industrial Average was called marginally lower, the S&P 500 index down 0.1%, and the Nasdaq Composite 0.2% lower. The yield on the US 10-year Treasury was quoted at 4.39%, widening from 4.36%. The yield on the US 30-year Treasury was quoted at 4.96%, stretching from 4.92%. Brent oil was quoted down at $68.68 a barrel at midday in London on Tuesday from $68.72 late Monday. Gold was also quoted lower, at $3,388.28 an ounce against $3,397.12. Gold prices eased slightly on Tuesday but remained within a range,‘ said Naga analyst Frank Walbaum. ‘Markets awaited further signals from the Federal Reserve as Fed Chair Jerome Powell and Governor Michelle Bowman are scheduled to speak later today. Although recent US data have been resilient, any dovish remarks could increase gold‘s appeal. ‘Meanwhile, the European Central Bank is expected to hold rates steady later this week, pausing after a series of cuts. This could weigh on non-yielding assets like gold.’ Still to come on Tuesday’s economic calendar, the US Redbook index and the Richmond Fed manufacturing index. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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