|
Investors’ mood was lifted on Tuesday by lower-than-expected US consumer price index inflation during June despite a rise in oil prices as the conflict between the US and Iran continued. The FTSE 100 closed up 31.10 points, 0.3%, at 10,529.39. The FTSE 250 ended up 10.25 points at 23,406.83, while the AIM All-Share rose 4.44 points, 0.6%, to 765.58. The Cboe UK 100 ended up 0.3% at 1,044.27, the Cboe UK 250 was up 0.2% at 20,149.80, and the Cboe Small Companies ended up 0.3% at 18,502.19. The turnaround in the fortunes of London’s blue-chip index came as figures showed US consumer prices fell more than expected in June, as a sharp drop in energy costs more than offset increases in food prices. According to the US Bureau of Labor Statistics, the consumer price index fell 0.4% in June from May on a seasonally adjusted basis, after rising 0.5% the previous month. The decline, the steepest since prices fell 0.8% in April 2020, was larger than the 0.1% drop expected by the FXStreet-cited consensus. Annual consumer price inflation slowed to 3.5% in June from 4.2% in May, undershooting the FXStreet-cited consensus, which had expected inflation to ease to 3.8%. On an annual basis, inflation not including food and energy eased to 2.6% in June from 2.9% in May, beating expectations for a 2.8% reading. Kathleen Brooks, research director at XTB, said the report ‘drastically’ reduces the chance of a rate cut at this month’s Federal Open Market Committee meeting. Brooks noted there is now a 15% chance of a rate hike from the Fed on July 31, compared to a 40% chance before the reading. Bank of America said the downside surprise gives the Fed more time to decide its next move, while TD Economics said it should ‘help to quiet some of the more hawkish voices.’ The figures saw the dollar soften and bond yields creep lower as traders adjusted interest rate bets. The US 10-year Treasury yield traded at 4.56% on Tuesday, narrowed from 4.60% on Monday, and the US 30-year Treasury yield eased to 5.07% from 5.09%. The euro traded higher against the greenback, at $1.1432 on Tuesday against $1.1400 on Monday. Against the yen, the dollar was trading at JP¥161.96, down from JP¥162.32 on Monday. The pound traded at $1.3396 on Tuesday afternoon, up from $1.3378 on Monday. Against the euro, sterling eased to €1.1709 from €1.1733 on Monday. Stocks in London had earlier opened lower as oil prices surged once more as tensions in the Middle East intensified. Iran’s Islamic Revolutionary Guard Corps said it had struck two UAE tankers in the Strait of Hormuz, while the US carried out a third consecutive night of strikes on Iranian targets. The UAE condemned the tanker attack as ‘brazen’. The IRGC also said it had targeted US facilities in Jordan and Bahrain overnight, while the US military said it had completed strikes aimed at degrading ‘Iran’s ability to attack commercial shipping’. The escalation followed US President Donald Trump’s announcement on Monday that Washington was reinstating a naval blockade of Iranian ports and would impose a 20% charge on all cargo shipped through the Strait of Hormuz. But on Tuesday, Trump said he was scrapping the planned levy, and replacing the fee with trade deals with Gulf allies. Brent crude for September delivery traded sharply higher at $84.00 a barrel on Tuesday, from $79.42 at the time of the London equity market close on Monday. ‘Investors feel like they’ve hit rewind on a movie they didn’t enjoy first time round,’ commented AJ Bell Head of Markets Dan Coatsworth. The oil price rise boosted BP, up 2.3%, and Shell, up 1.2%. BP gains came as it also delivered a strong second quarter trading update with the higher oil price supporting margins while it also made progress lowering debt. Reflecting on what it called a ‘strong’ trading update, analysts at RBC Capital Markets said they continue to see net debt declining rapidly into the second half of 2026, and expect BP to shoot through its net debt reduction target a year early. In European equity markets on Tuesday, the CAC 40 in Paris ended up slightly, while the DAX 40 in Frankfurt rose 0.1%. In New York, the Dow Jones Industrial Average was up slightly, the S&P 500 was 0.5% higher and the Nasdaq Composite advanced 1.1%. US banks were in the spotlight after second quarter results which saw Goldman Sachs shares rise 6.9% and JPMorgan climb 2.4% after both beat expectations. Bank of America was also in the green up 2.4%, but Citigroup fell 1.9% and Wells Fargo shed 1.1%. IBM was the big loser on Wall Street plunging 26% as it warned of an unexpected ‘performance shortfall’ in its Software and Infrastructure divisions and a narrower profit margin. Gold traded at $4,085.44 an ounce on Tuesday, up from $4,015.30 on Monday. Back in London, and on the FTSE 100 higher metals prices boosted mining stocks, while a downgrade by JPMorgan helped send Pearson down 6.8%. On the FTSE 250 Genus rose 3.7% after saying it expects annual profit to come in ahead of market expectations, after a better than expected second half. The Basingstoke, England-based animal biotechnology and genetics company now expects adjusted pretax profit of £98 million for the year to June 30, rising 32% from £74.3 million the year prior. This would be ahead of market consensus of £95.5 million, Genus said. Atalaya Mining Copper advanced 6.5% after reporting stronger second-quarter copper production, while Ithaca Energy climbed 3.1% after raising its operating guidance following a strong fourth quarter. The biggest risers on the FTSE 100 were Airtel Africa, up 11.40p at 349.20p, Rio Tinto, up 222.00p at 6,955.00p, Glencore, up 15.70p at 530.20p, Centrica, up 4.80p at 177.30p and Anglo American, up 86.00p at 3,670.00p. The biggest fallers on the FTSE 100 were Pearson, down 89.00p at 1,229.00p, Intercontinental Hotels Group, down 6.15p at 157.50p, Smith & Nephew, down 40.50p at 1,114.00p, Barratt Redrow, down 6.80p at 278.20p and Convatec, down 4.20p at 210.60p. Meanwhile among smaller firms, Aminex shares closed 43% lower after it warned that the operator of the Ruvuma production sharing contract and the Ntorya development is requesting amendments to the 2026 work programme and budget, including ‘a significant reduction in the 2026 work programme & budget that will result in a delay to the production of first gas and the drilling of the Chikumbi-1 well.’ The request follows a change of management at ARA Petroleum. Wednesday’s global economic calendar has a industrial production, retail sales and GDP data from China overnight, an interest rate decision in Canada and the Federal Reserve’s Beige Book. Wednesday’s local corporate calendar has trading statements from miners Antofagasta, Rio Tinto and housebuilder Barratt Redrow. Copyright 2026 Alliance News Ltd. All Rights Reserved.
|
