London’s FTSE 100 underperformed European peers on Wednesday, seeing little boost from a US-China framework on trade, while stocks in New York are set to fall on the opening bell there.
In focus this afternoon is a US inflation reading as well as the UK spending review to be outlined by the chancellor.
The FTSE 100 index edged up 6.64 points, 0.1%, at 8,859.72. The FTSE 250 was up 33.62 points, 0.2%, at 21,423.08, and the AIM All-Share was up 1.48 points, 0.2%, at 767.80.
The Cboe UK 100 was down 0.1% at 883.00, the Cboe UK 250 added 0.1% at 18,927.49, and the Cboe Small Companies was flat at 16,916.45.
In European equities on Wednesday, the CAC 40 in Paris rose 0.2% and the DAX 40 in Frankfurt was 0.3% higher.
China’s vice premier and top trade negotiator said Beijing was ready to ‘strengthen cooperation’ with Washington, Chinese state media said Wednesday, following trade talks in London it said had made substantial progress.
US Commerce Secretary Howard Lutnick expressed optimism after a full day of negotiations that concerns surrounding rare earth minerals and magnets ‘will be resolved’ eventually, as the deal is implemented.
But this framework will first need to be approved by leaders in Washington and Beijing, officials said, at the end of meetings at the British capital’s historic Lancaster House.
Rabobank analysts commented: ‘We would, however, make the following characteristically downbeat observations. First this is a truce within a truce. It is an agreement that is designed to maintain the 115ppt lowering of tariffs on both sides as announced on May 12. It does not, though, alter the fact that this reduction is set to expire on Aug 10. With US levies on China still historically elevated even in the wake of the May 12 agreement and, more importantly, with the clock still ticking in terms of these rates potentially rising significantly, we see little reason for cheer.
‘While the market might judge this week’s talks as a sign of both sides taking a pragmatic approach we doubt the denizens of Main Street will feel they have sufficient clarity and confidence to invest and hire. As a result, it seems uncontroversial to suggest the trade war will continue to have a chilling effect on activity.’
Shares in China-exposed shares were higher in London. Insurer Prudential added 2.4%, while lender Standard Chartered climbed 1.8%.
A US federal appeals court is allowing President Donald Trump’s global tariffs to remain in effect for now, according to an order on Tuesday, while it considers the case on an expedited track.
The decision extends a temporary reprieve for the Trump administration as officials push back on a ruling by a lower court that blocked the president’s wide-ranging levies.
The US Court of Appeals for the Federal Circuit said it would fast-track its consideration of the case given the ‘issues of exceptional importance’ at stake.
The yield on the US 10-year Treasury was at 4.50% midday Wednesday UK time, widening from 4.48% at the London equities close on Tuesday. The 30-year yield stretched to 4.97% from 4.95%.
On the economic calendar on Wednesday is a US consumer price inflation reading at 1330 BST.
According to consensus cited by FXStreet, the pace of consumer price inflation is expected to have accelerated to 2.5% in May from 2.3% in April.
Sterling fell to $1.3496 early Wednesday afternoon, from $1.3509 at the time of the London equities close on Tuesday. The euro traded at $1.1439, up from $1.1418. Against the yen, the dollar advanced to JP¥145.13 from JP¥144.93.
SPI Asset Management analyst Stephen Innes commented: ‘Adding a new twist to the dollar’s narrative: chatter that Treasury Secretary Scott Bessent is in the running to replace Powell. That’s not just noiseit’s a flashing red light for dollar bulls. Bessent is viewed as a monetary dove in Trump’s image, and markets have no appetite for blurred lines between fiscal and monetary policy. Fed independence remains sacred ground. If Bessent’s name continues to trend, expect the greenback to cling to it like an anchor.’
Bloomberg reported Tuesday that Bessent is a name being pushed by a ‘growing chorus of advisers inside and outside the Trump administration’ to replace Jerome Powell as Fed chief.
Trump had said last week that he would name a successor to Powell ‘very soon’. Powell’s term as Fed chair ends in May of next year.
Citing people familiar with the matter, Bloomberg reported that Kevin Warsh is another candidate in the running. The news agency noted Trump interviewed Warsh for the Treasury secretary role last year.
In New York, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all called to open 0.2% lower.
Back in London, Ibstock shares slumped 13%. The Leicestershire, England-based building products supplier said it expects adjusted earnings before interest, tax, depreciation and amortisation for 2025 to be between £77 million and £82 million.
This is between a 2.5% fall and a 3.8% rise compared to £79 million in 2024.
Peel Hunt noted the outcome would be below consensus of £92 million.
Quilter rose 5.6% after UBS raised the stock to ’buy’ from ’neutral’.
Ricardo jumped 25%. It agreed to a £281 million all-cash buyout from Canadian consultancy firm WSP Global, the two companies announced on Wednesday, resolving a period of agitation by Ricardo investor Science Group.
Montreal, Quebec-based WSP will pay 430 pence per share for the Shoreham-by-Sea, West Sussex-based environmental and engineering consultancy.
The offer is at a 28% premium to Ricardo’s 335p closing price on Tuesday.
Ricardo’s directors deem the bid to be ‘fair and reasonable’. WSP said it has received undertakings to accept the offer representing 48% of Ricardo shares.
The offer also has the backing of Ricardo shareholder Science Group, which agreed to sell 12.4 million Ricardo shares to WSP at the offer price on Wednesday, representing an additional 19.99% toward offer acceptance.
Cambridge, England-based Science Group, which has a 21.8% total stake in Ricardo, said cash proceeds from the sale of its shares in Ricardo will amount to £53.5 million, giving it a 70% pretax return on investment. It said it will retain the proceeds for future strategic investment and opportunities.
Science Group shares rose 11%.
A barrel of Brent fell slightly to $67.68 early on Wednesday afternoon, from $67.82 at the time of the closing bell on the London Stock Exchange on Tuesday. Gold fetched $3,333.06 an ounce, up from $3,325.36.
UK Chancellor Reeves will unveil her spending review on Wednesday, arguing that her priorities are ‘the priorities of working people’.
The chancellor is expected to focus on ‘Britain’s renewal’ as she sets out her spending plans for the coming years, with big increases for the NHS, defence and schools.
Arguing that the government is ‘renewing Britain’, she will acknowledge that ‘too many people in too many parts of the country are yet to feel it’.
She will say: ‘This government’s task my task and the purpose of this spending review is to change that, to ensure that renewal is felt in people’s everyday lives, their jobs, their communities.’
Among the main announcements is expected to be a £30 billion increase in NHS funding, a rise of around 2.8% in real terms, along with an extra £4.5 billion for schools and a rise in defence spending to 2.5% of GDP.
Lloyds Bank analysts commented: ‘In theory it ought to be a political set piece of second order importance for market participants. That is because it is budgets that set the size of the spending ’pie’ that the market needs to finance, and the way that pie is divided up at a spending review is usually more about political winners and losers. In practice though, given the spotlight on fiscal policy constraints, this edition is likely to get more investor attention.’
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