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London stocks closed in the red on Tuesday as renewed US tariff threats and signs of a cooling UK labour market unsettled investors, while bond market volatility fuelled by Greenland concerns added to global risk aversion. The FTSE 100 index closed down 68.57 points, 0.7%, at 10,126.78. The FTSE 250 ended 153.94 points lower, 0.7%, at 22,957.87, and the AIM All-Share closed down 2.35 points, 0.3%, at 801.14. The Cboe UK 100 was down 0.7% at 1,012.53, the Cboe UK 250 was 0.7% lower at 20,119.92, and the Cboe Small Companies was up slightly at 17,802.22. The threat of tariffs from US President Donald Trump continued to weigh heavy on European markets, while screens on Wall Street were a sea of red as trading resumed following Monday’s public holiday. In European equities on Tuesday, the CAC 40 in Paris closed down 0.6%, while the DAX 40 in Frankfurt ended 1.0% lower. In New York, financial markets were lower at the time of the London equity market close. The Dow Jones Industrial Average was down 1.3%, the S&P 500 was 1.4% lower and the Nasdaq Composite faltered 1.5%. Trump said at the weekend that, from February 1, Britain, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden would be subject to a 10% tariff on all goods sent to the US until Denmark agrees to cede Greenland. The announcement drew angry charges from US allies who are pondering countermeasures. ‘Trade concerns are now front and centre, with European leaders pushing back against Washington‘s stance and reportedly discussing countermeasures. The potential use of the EU’s Anti-Coercion Instrument has added to market unease, particularly for export-heavy sectors such as autos and luxury goods, which have already come under pressure,’ noted David Morrison, senior market analyst, at Trade Nation. Morrison pointed to apparent split over how Europe should respond to Trump’s threats. ‘While UK Prime Minister Starmer pursues a softly-softly approach, insisting that jaw-jaw is better than war-war, French President Macron favours a more aggressive approach and wants to fight US tariffs with European ones,’ he explained. European Commission President Ursula von der Leyen cautioned that Trump risked plunging US ties with the EU into a ‘downward spiral’. While France’s Macron warned against US attempts to ‘subordinate Europe’, and blasted as ‘unacceptable’ Trump’s threats to impose tariffs of up to 25% on countries opposed to his Greenland plans. Reports suggested Europe could consider retaliatory tariffs and also possibly a concerted strategy to offload US Treasury bonds. The yield on the US 10-year Treasury was quoted at 4.28%, widening from 4.21% on Friday. The yield on the US 30-year Treasury was quoted at 4.91%, stretched from 4.82% on Friday. The focus now switches to Davos, which Trump is due to address on Wednesday. ‘Escalation or softening in tone seems likely to set the direction for European risk assets in the days ahead,’ said Trade Nation’s Morrison. Adding to the bond market angst, a sharp sell-off in Japan. Kathleen Brooks at XTB Research said while the sell off in long end bond yields was global, the biggest move ‘by far’ was in Japan. The 30-year Japanese bond yield rose 26 basis points, as investors ‘fret about an expansionary fiscal policy if PM Takaichi wins the February 8 election,’ she pointed out. ‘The Greenland issue is taking the headlines today, however, in the long term, the insane rise in Japanese bond yields could have a bigger global effect,’ Brooks suggested. ‘Japan is central to global capital flows, if there is disruption in Japanese financial markets then this could have a knock-on effect on global capital flows and overall risk sentiment,’ she added. Brooks said the risk is that the sell off in bonds causes ‘something to break, either a Japanese bank or fund gets into trouble like Silicon Valley Bank back in 2023, which is why it is worth watching the Japanese bond market as well as the Trump show this week.’ The pound was quoted higher at $1.3462 at the time of the London equities close on Tuesday, compared to $1.3428 on Monday. The euro stood at $1.1733, higher against $1.1643. Against the yen, the dollar was trading at JP¥157.95, lower from JP¥158.11. In London, analysts weighed data which pointed to a cooling labour market and a slowing in average wage growth. According to the Office for National Statistics, the jobless rate was 5.1% in the three months to November, unchanged from the three months to October. This came slightly above the FXStreet-cited market consensus, which had pencilled in a slight fall in unemployment to 5.0%. The ONS said payrolled employees in the UK fell by 155,000, or 0.5%, on-year in November, and fell by 33,000, or 0.1%, on-month. Annual growth in regular earnings, excluding bonuses, was 4.5% in the three months to November, slowing from 4.6% in the three months to October. Annual average regular earnings growth was 7.9% for the public sector and 3.6% for the private sector. ‘Today’s labour market data showed easing wage pressures, weak employment and rising redundancies. We judge this to be consistent with our view that the labour market continues to ease and has further to go in coming months,’ said analysts at Barclays. Informa led the blue chip risers, up 4.6%, after reporting ‘strong trading’ in the fourth quarter. The London-based events, digital services, and academic publishing business expects revenue of at least £4.0 billion in 2025, up 13% from £3.55 billion in 2024, representing underlying revenue growth of 6.3%. On the FTSE 250, the weak labour statistics weighed on PageGroup, down 3.8%, and Hays, down 0.3%. Morgan Stanley reiterated an ’underweight’ stance on both recruitment firms and cut share price targets. Elsewhere, Funding Circle jumped 14% as it reported stronger-than-expected revenue and profit growth in 2025, achieving its financial 2026 revenue target a year earlier. The London-based lending platform focused on small and medium enterprises said revenue for the year was about £204 million, up 28% from a year earlier, beating market expectations of £191 million. Profit before tax rose to around £20 million from £3 million in 2024, also ahead of consensus of £17 million. Wise Group jumped 15% as analysts raised profit forecasts amid strong third quarter trading. The London-based money transfer services provider expects full-year underlying income to be around the middle of its guided range of 15% and 20% growth, and expects underlying pretax profit margin for financial 2026 to be ‘towards the top’ of the guided 13% to 16% target range. JPMorgan analyst Craig McDowell said the underlying income forecast was better than consensus at 16.3%, while the underlying pretax profit margin projection was ahead of consensus at 14.3%. McDowell predicted 9% to 12% pretax profit upgrades for financial 2026, while Bank of America was more bullish, raising numbers by 20%. Brent oil traded higher at $64.89 a barrel on Tuesday, down from $64.13 late on Monday. Gold was quoted at $4,742.56 an ounce on Tuesday, up from $4,671.76 on Monday. The biggest risers on the FTSE 100 were Informa, up 39.80 pence at 912.20p, Haleon, up 11.80p at 372.90p, Endeavour Mining, up 112.00p at 4,208.00p, Rentokil Initial, up 8.00p at 461.70p and Melrose Industries, up 9.00p at 625.80p. The biggest fallers on the FTSE 100 were Mondi, down 41.20p at 845.40p, Beazley, down 44.00p at 1,126.00p, Pershing Square Holdings, down 134.00p at 4,442.00p, Land Securities, down 19.00p at 635.00p and Bunzl, down 57.00p at 1,989.00p. Wednesday’s global economic calendar has UK inflation figures and Canadian producer price inflation data. Wednesday’s UK corporate calendar has trading statements from luxury goods manufacturer Burberry, sports retailer JD Sports, electrical retailer Currys and pub chain JD Wetherspoon. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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