An increasingly tense geopolitical backdrop knocked European stocks on Tuesday, while the pound continued to struggle ahead of Wednesday’s UK inflation print.
The FTSE 100 index ended down 10.30 points, 0.1%, at 8,099.02. The FTSE 250 rose 32.21 points, 0.2%, at 20,427.62, and the AIM All-Share faded 3.32 points, 0.5%, at 724.23.
The Cboe UK 100 ended flat at 814.55, the Cboe UK 250 rose 0.1% to 17,914.72, and the Cboe Small Companies ended down 0.5% at 15,738.91.
The CAC 40 in Paris and the DAX 40 in Frankfurt each lost 0.7%.
On a day which saw geopolitical worries sit front and centre, defence stocks came to the fore.
BAE Systems and Qinetiq rose 1.3% and 0.6% in London, while Rheinmetall added some 4.0% in Frankfurt. The latter also unveiled an aim to double annual sales by 2027, amid rising defence spending.
Travel stocks struggled, however. British Airways parent International Consolidated Airlines Group shed 2.0%, while Wizz Air gave back 2.2%.
Russia said Tuesday that Ukraine had fired US-supplied long-range missiles into its territory for the first time since Washington authorised such strikes, as President Vladimir Putin issued a nuclear threat on the 1,000th day of the war.
With neither side showing any sign of relenting, Putin signed a decree broadening the justification for Moscow’s use of nuclear weapons.
The grim anniversary opened with a Russian strike in the eastern Ukrainian region of Sumy that gutted a Soviet-era residential building and killed at least 12 people, including a child.
President Volodymyr Zelensky published images of rescue workers hauling bodies from the debris and called on Kyiv’s allies to ‘force’ the Kremlin into peace.
Against the yen, the dollar was trading at JP¥154.21 late on Tuesday afternoon, down compared to JP¥155.01 at the same time on Monday. The yen shone due to its safe haven allure.
The pound was quoted at $1.2676, higher compared to $1.2649 at the equities close on Monday. The euro stood at $1.0590, higher against $1.0572.
According to FXStreet, a UK consumer price index reading on Wednesday is expected to show the pace of annual inflation accelerated to 2.2% last month, back above the Bank of England target, from 1.7% in September.
The BoE was in focus on Tuesday, as a handful of policymakers spoke in front of the UK’s Treasury Select Committee.
The BoE’s newest external member of the Monetary Policy Committee is among the most dovish of the rate-setting team, analysts at Barclays assessed.
Alan Taylor, in one of his public debuts, told the Treasury Committee in UK parliament that he predicts around 100 basis points of BoE rate cuts by the end of next year.
‘I think if you ask what does gradual mean right now, it’s aligned in our case closely to the market curve,’ he explained.
Taylor joined the MPC in September. He voted with the majority to maintain bank rate in his first meeting and then joined the bulk of the MPC by voting to cut by 25 basis points earlier this month.
Meanwhile, Governor Andrew Bailey warned over ‘fragmenting’ the world economy amid promises from Donald Trump that he will impose steep trade tariffs on other countries, PA reported.
Speaking to MPs on Tuesday, Andrew Bailey said the UK should keep an ‘active dialogue’ with the incoming US administration, following Trump’s election win.
When asked about potential tariffs, Bailey said: ‘I would be very clear, fragmenting the world economy is not a good thing.’
However, the governor added that he does not want to ‘jump to conclusions’ on the effect of particular tariffs on UK policy.
‘I don’t think we can make that judgment today because we literally do not know what their intentions are.’
Trump has repeatedly said he will levy a 20% tax on all imports, which economists have warned would hit UK economic growth.
In London, Diploma shares slumped 8.0%, the worst FTSE 100 performer. The London-based supplier of specialized technical products and services reported a pretax profit increase of 13% to £176.6 million from £155.6 million the year before. Revenue rose 14% to £1.36 billion from £1.20 billion.
Revenue missed company-compiled consensus of £1.37 billion.
Elsewhere in London, Mulberry plunged 12% as it reported weaker earnings and set out plans to be a ‘leaner, more agile organisation’.
In the half-year to September 28, the Somerset, England-based handbag maker said revenue fell 19% to £56.1 million from £69.7 million the prior year, with uncertain macroeconomic trends continuing to impact its performance. The firm’s pretax loss for its half-year widened to £15.7 million from £12.8 million.
‘In response to current market conditions, we have taken decisive steps to streamline operations, improve margins, reduce working capital, and strengthen our cash position. This has also meant reviewing our internal team structure to ensure we become a leaner, more agile organisation. Additionally, we’ve made strategic adjustments to our product, pricing, and distribution strategies, and we’ve begun discussions with luxury wholesale partners to ensure we are present wherever our customers shop,’ Chief Executive Andrea Baldo sad.
In New York stocks were mixed. The Dow Jones Industrial Average was down 0.4%, the S&P 500 added 0.1% and the Nasdaq Composite rose 0.4%.
Walmart shares rose 3.9% in New York, lurking around record highs, after it lifted its annual outlook again on the back of a ‘strong’ third quarter.
The retailer said it achieved revenue of $169.59 billion in the three months to October 31, a rise of 5.5% on-year from $160.80 billion. Net income jumped to $4.71 billion from $643 million.
Net sales amounted to $168.00 billion, up 5.5%. Aside from net sales, Walmart also generates revenue from memberships.
The Bentonville, Arkansas-based retailer said basic net income per share shot up to $0.57 from $0.06 a year prior.
‘We had a strong quarter, continuing our momentum. Our associates are working hard to save people time and money and to transform our business. In the US, in-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that. Our teams are executing and delighting our customers and members with the value and convenience they expect from Walmart,’ Chief Executive Officer Doug McMillon said.
Looking ahead, Walmart now expects net sales to grow between 4.8% and 5.1% at constant currency for the full-year, its outlook boosted from the August guidance of a 3.8% to 4.8% rise. Its previous outlook represented an improvement from guidance of a 3.0% to 4.0% climb.
Brent oil was quoted lower at $72.93 a barrel late on Tuesday afternoon in London, easing from $73.08 late Monday. Gold rose to $2,628.26 an ounce against $2,610.04 late Monday.
The global economic calendar has the inflation reading from the UK and a German producer price index at 0700 GMT.
The local corporate calendar has half-year results from water utility Severn Trent and industrial chains and power-transmission products supplier Renold.
In New York, earnings from Nvidia will be in focus after the closing bell on Wednesday.
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