Stocks in London ended flat on Tuesday as strength in travel shares offset weakness in oil majors and gold miners, with markets reacting to a fragile ceasefire between Israel and Iran.
The FTSE 100 index closed up just 0.95 points, at 8,758.99. It had earlier traded as high as 8,831.90.
The FTSE 250 ended 205.25 points higher, 1.0%, at 21,326.20, and the AIM All-Share rose 3.25 points, 0.4%, at 762.54.
The Cboe UK 100 closed up 0.1% at 873.94, the Cboe UK 250 ended 1.1% higher at 18,876.38, and the Cboe Small Companies climbed 0.3% at 17,278.26.
In European equities on Tuesday, the CAC 40 in Paris closed up 1.1%, and the DAX 40 in Frankfurt ended 1.6% higher.
US President Donald Trump said that the truce between Iran and Israel was in effect, a day after Tehran struck at a US base in Qatar a move that came after US strikes on Iranian nuclear facilities.
Israel struck Iran despite a warning from Trump not to retaliate against an alleged Iranian breach of a ceasefire, but said it would refrain from further attacks.
Iranian state television denied the country had violated the truce.
Benjamin Netanyahu’s office said that Israeli forces had hit a radar station near Tehran but would not launch any more assaults following a conversation between the Israeli prime minister and the US president.
The ceasefire saw the oil price slump, dragging FTSE 100-listed BP and Shell down 4.8% and 3.6% respectively.
On Tuesday, Brent oil traded sharply lower at $68.08 a barrel, down from $76.39 on Monday. Gold was quoted lower at $3,314.07 an ounce against $3,387.65.
Gold miner Endeavour Mining declined 5.8% while Fresnillo fell 2.5%.
In contrast, airlines easyJet and British Airways owner IAG both climbed 6.4% on hopes for lower fuel costs and reduced travel disruption.
On Wall Street, markets were higher at the time of the London close on Tuesday.
The Dow Jones Industrial Average was up 1.0%, the S&P 500 was 0.9% higher, and the Nasdaq Composite gained 1.3%.
Federal Reserve Chair Jerome Powell told Congress that the central bank can afford to wait for the impact of tariffs before deciding on further interest rate cuts despite President Donald Trump’s calls to do so.
The Fed has a duty to prevent a one-time spike in prices from becoming an ‘ongoing inflation problem,’ Powell said in prepared remarks to the House Committee on Financial Services.
‘For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,’ he added.
Powell’s reiteration that the Fed can wait to lower rates comes after two Fed officials - Christopher Waller and Michelle Bowman - recently expressed openness to cuts as early as in July.
Hours before Powell’s testimony, Trump again urged the Fed chair to slash rates, saying these should be ‘at least two to three points lower’ given that inflation remains benign.
Worries about possible tariffs were reflected in a drop in US consumer confidence figures.
The Conference Board’s consumer confidence index dropped by 5.4 points this month to 93.0, from 98.4 in May.
‘Consumer confidence weakened in June, erasing almost half of May’s sharp gains,’ said Stephanie Guichard, a senior economist at the Conference Board.
She added that the decline was ‘broad-based,’ with consumers’ assessments of current conditions and expectations of the future both contributing to the deterioration.
Trump’s sweeping tariffs are still at the forefront for consumers, and ‘were frequently associated with concerns about their negative impacts on the economy and prices,’ Guichard added.
The yield on the US 10-year Treasury was quoted at 4.30%, narrowed from 4.31%. The yield on the US 30-year Treasury was quoted at 4.85%, widened from 4.84%.
In the UK, Bank of England interest rate-setter Megan Greene has cautioned that recent rises in inflation could prove longer-lasting than forecast, leaving policymakers in an ‘uncomfortable place’.
In a speech at the National Institute of Economic & Social Research, Monetary Policy Committee member Megan Greene said that stubborn inflation of around 3.5% for the rest of the year could keep fuelling wage rises and price hikes in the UK.
She said food prices have ‘surprised consistently to the upside’, adding that the Israel-Iran conflict could also push up inflation by putting pressure on oil prices.
‘I worry about the near-term profile for inflation this year, which in my view now resembles more of a ’plateau’ than a ’hump’,’ she said.
The pound was quoted up at $1.3621 at the time of the London equities close on Tuesday, compared to $1.3501 on Monday. The euro stood higher at $1.1621 against $1.1545. Against the yen, the dollar was trading at JP¥144.84, down compared to JP¥146.37.
Bunzl gave back strong early gains, closing up 0.2%, after backing full-year guidance.
The London-based distribution and outsourcing company said revenue is expected to be 4% higher in the six months to June 30 than the prior year, at constant exchange rates, and up to 1% higher at actual exchange rates. Revenue was £5.71 billion in the six months ended June 30, 2024.
Growth at constant exchange rates is expected to be driven by acquisitions, net of disposals, and with broadly flat underlying revenue over the period.
Peel Hunt said the statement is likely to be ‘well received’ following the shock warning earlier in the year.
‘It looks increasingly like it was ’one and done’, and the focus can now return to the long-term attractions of the compounding model.’
In April, shares in Bunzl slumped after it lowered guidance and paused its share buyback programme amid weaker-than-expected trading.
Cruise operator Carnival jumped 11% as it reported its highest-ever second quarter operating results, and said it expects to continue to take its results higher over time.
In the three months to the end of May, Carnival reported net income of $565 million, multiplied from $92 million a year prior.
Revenue rose 9.5% to $6.33 billion from $5.78 billion.
On The Beach advanced 5.9% as RBC Capital Markets started coverage with an ’outperform’ rating.
The broker believes On the Beach can continue to take market share from ‘legacy tour operators’ in its core beach holidays market and grow its ‘city break proposition’.
The biggest risers on the FTSE 100 were JD Sports, up 4.74 pence at 76.56p, IAG, up 19.70p at 328.40p, easyJet, up 32.20p at 538.80p, Barclays, up 14.25p at 332.90p, and Intermediate Capital Group, up 70.00p at 1,980.00p.
The biggest fallers on the FTSE 100 were Endeavour Mining, down 144.00p at 2,212.00p, BP, down 18.45p at 367.95p, BAE Systems, down 79.00p at 1,801.00p, Shell, down 99.50p at 2,584.50p, and Glencore, down 10.35p at 275.10p.
Wednesday’s global economic calendar has Australian CPI data overnight, plus US new homes sales figures.
Wednesday’s local corporate calendar has full-year results from Babcock International.
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