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Late market roundup: London closes lower as trade rally stumbles

The FTSE 100 closed down on Wednesday as some trading statements weighed on the market despite recent positivity from the US-China deal.

The FTSE 100 index ended down 17.91 points, 0.2%, at 8,585.01. The FTSE 250 was up 59.90 points, 0.3%, at 20,819.57, and the AIM All-Share was up 0.53 of a point, 0.1%, at 731.62.

The Cboe UK 100 was down 0.4% at 855.53, the Cboe UK 250 was up 0.3% at 18,201.61, while the Cboe Small Companies climbed 1.3% at 15,921.93.

In European equities on Wednesday, the CAC 40 in Paris was down 0.7% and the DAX 40 in Frankfurt ended down 0.5%.

In New York, the Dow Jones Industrial Average was flat, the S&P 500 index was up 0.1% and the Nasdaq Composite up 0.6%.

Investors continued to weigh the US-China trade deal which has lessened the likelihood of a global recession.

Emmanuel Cau at Barclays commented: ‘Lower tariffs tail risk means lower recession risk. The US-induced trade war is de-escalating more quickly than we had expected, and the meaningful US-China truce removes a key tail risk for the global economy.’

‘While the tariffs endgame remains uncertain, we believe that a 10% universal/30% China tariffs scenario is now likely, which is somewhat better than our 10%/60% assumption pre-’liberation day’. Our US economists now expect a less significant jump in inflation and no recession. However, macro set-up is still sub-optimal and with stocks already above pre-’liberation day’ levels, a lot of good news is likely priced in already.’

Nonetheless, Cau added ‘further upside is possible but in our view would be contingent on stronger growth to boost earnings and valuations, while much uncertainty remains about a prospective US-EU trade deal.’

‘We believe that so long as there is a path towards more deals and lower tariffs, markets will likely continue to see the glass half full and ignore backward-looking hard data, while soft data may actually start to rebound,’ Cau stated.

UBS noted the Nasdaq has returned to bull market territory and thinks there is more to go.

‘We think tech stocks should continue to recover, supported by strong earnings growth of 12% or higher if tariff headlines continue to improve. We favor diversified exposure across leading internet and software companies and names along the AI semiconductor supply chain globally,’ commented Mark Haefele, chief investment officer, UBS Global Wealth Management

The pound was quoted higher at $1.3302 late on Wednesday in London, compared to $1.3278 at the equities close on Tuesday. The euro stood at $1.1208, higher against $1.1174. Against the yen, the dollar was trading at JP¥146.43, lower compared to JP¥147.84 on Tuesday.

On the FTSE 100, Spirax Group fell 6.0%, as it maintained guidance but said revenue growth will be second-half weighted.

The Cheltenham, England-based thermal energy and fluid technology company maintained its outlook for 2025, but recognised the continuing uncertainty regarding the macroeconomic impact of tariffs.

Spirax said its local manufacturing ‘mitigates the direct exposure of tariffs’ and it expects to manage the financial impacts through ‘surcharges, pricing and limited reorganisation of manufacturing activity.’

Imperial Brands slid 7.3% after it said Chief Executive Stefan Bomhard will retire this year.

The Bristol, England-based tobacco products manufacturer said Bomhard will be succeeded as CEO by Lukas Paravicini, currently chief financial officer, on October 1.

Bonhard, who has been CEO for five years, will continue to serve on the board until the end of the year, and be available until May 2026 to support Paravicini with the transition. Murray McGowan, currently Imperial Brands’ chief strategy and development officer, will become CFO.

The news came as Imperial Brands reported operating profit fell 2.5% to £1.46 billion in the six months to March 31 from £1.49 billion a year prior.

On an adjusted basis, operating profit slipped 1.0% to £1.65 billion from £1.67 billion, but rose 1.8% at constant currency.

Revenue fell 3.1% to £14.60 billion from £15.06 billion but earnings per share improved 0.7% to 96.7 pence from 96.0p.

AJ Bell’s Russ Mould said the share price fall reflected the degree to which Bonhard has ‘won over sceptical investors with his five-year turnaround plan.’

Mondi led the blue-chip gainers, rising 3.2%, as JPMorgan upgraded to ’overweight’ from ’neutral’.

JPM analyst Detlef Winckelmann thinks Mondi’s valuation ‘screens attractive’. ‘

Over the last nine months, consensus has consistently assumed a recovery in containerboard and kraft paper markets which never materialised,’ he pointed out.

This has resulted in consistent earnings downgrades and made it difficult to invest based on valuation, Winckelmann explained.

‘However, for the first time in a while, consensus has not assumed a recovery in containerboard or kraft paper markets, and therefore we think the downgrade cycle is over (or at least very close to being over), which should increase the credibility of forward multiples,’ the JPM analyst said.

BAE Systems rose 1.5% after hosting a capital markets event on Tuesday.

Berenberg said most notable was management‘s expectation that Typhoon combat aircraft production rates may double from current levels of 12 to 14 aircraft per year.

‘The current backlog is 112 aircraft and the company pointed to a further 150 export opportunities for the aircraft. Rumoured interest stems from Turkey, Saudi Arabia and Qatar, among other countries. Typhoon build represented 3% of group revenue in 2024,’ Berenberg said.

On the FTSE 250, Burberry soared 17% as it announced new cost-cutting measures after reporting lower annual sales as its strategic reset continues.

The London-based luxury goods manufacturer reported a pretax loss of £66 million in the 52 weeks to March 29 compared with a profit of £383 million a year prior.

Adjusted operating profit plunged to £26 million from £418 million a year ago, while revenue fell 17% to £2.46 billion from £2.97 billion.

Despite this, Chief Executive Officer Joshua Schulman said he is ‘more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time.’

RBC Capital Markets said the results were ‘better than expected’.

‘We view these results as an encouraging first step, and believe management are pursuing the right strategy to reset the business on a more level footing, which in time should support a return to positive revenue and profit growth,’ it added.

Gold declined to $3,184.56 an ounce on Wednesday against $3,250.97 on Tuesday. Brent oil was quoted at $66.01 a barrel, down from $66.21 late Tuesday.

Thursday’s economic calendar has eurozone industrial production and GDP figures, a UK GDP print plus US PPI, retail sales and industrial production figures.

The local corporate calendar on Thursday has a trading statement from Aviva and full-year results from National Grid and United Utilities.

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