Tern PLC (TERN)

(Alliance News) - London stocks fell on Thursday morning after US Federal Reserve Chair Jerome Powell's warning that tariffs could generate increased inflation, while updates from Sainsbury and Dunelm offered bright spots.

Lloyds Bank analyst meanwhile commented: "Powell's comments after the London close, warning of an essentially stagflationary outlook, roiled markets further as his message emphasised the price stability part of the dual mandate."

The FTSE 100 index was down 28.76 points, 0.4%, at 8,246.84 near the open. The FTSE 250 was down 44.69 points, 0.2%, at 19,221.12, and the AIM All-Share was down 0.62 points, 0.1%, at 669.26.

The Cboe UK 100 was down 0.5% at 820.10, the Cboe UK 250 was down 0.4% at 16,763.11, and the Cboe Small Companies was up 0.5% at 15,125.66.

J Sainsbury led the FTSE 100, up 2.6%.

The groceries retailer declared a 13.6 pence per share dividend for financial 2025, up 3.8% from 13.1p the year before. Pretax profit rose 39% to GBP384 million, and underlying group sales rose 1.3% to GBP33.14 billion.

The firm also said it plans to distribute GBP250 million through a special dividend in the current year and to conduct a GBP200 million buyback.

Dunelm led the FTSE 250, jumping 5.9%.

The Syston, Leicestershire-based home furnishings retailer said sales grew 6.3% to GBP462 million in its third quarter, with year-to-date sales rising 3.7% to GBP1.36 billion. It also said it expects full-year pretax profit to be in line with consensus.

Man Group was among the mid-cap losers, down 2.8%.

This was despite the London-based investment manager reporting USD172.6 billion in assets under management at March 31, up from USD168.6 billion at December 31. Man Group also estimates AuM totalling USD172.6 billion as of Monday.

Lunglife AI led AIM, with its stock more than tripling in value.

The lung cancer clinical diagnostic solutions developer announced an exclusive US license and distribution agreement with Circulogene Theranostics Inc, for its LungLB test.

At the other end, Tern dropped 19%.

The Reading, England-based computer and network security company announced an underwritten open offer to raise approximately GBP340,140 through the issue of 34.0 million shares at 1.00p each.

In European equities on Thursday, the CAC 40 in Paris was down 0.5%, while the DAX 40 in Frankfurt was up 0.2%.

On the coming ECB decision, Lloyds commented: "The [Bank of Canada] may have decided to leave its policy rate unchanged at 2.75% yesterday in the face of extreme uncertainty...but it will be harder for the ECB to take the same approach today.

"That is because unlike a split in market expectations for the BoC, a 25bp cut from the ECB, taking the repo rate to 2.25% is fully priced and causing an upset amidst the current fragilities in financial market sentiment could backfire badly.

"There has been some further progress on the inflation side with meaningful deceleration in services prices, and there is an element of the US trade shock that will be demand negative supporting the case for a cut."

The pound was quoted higher at USD1.3241 early on Thursday in London, compared to USD1.3228 at the equities close on Wednesday. The euro stood at USD1.1370, slightly higher against USD1.1363. Against the yen, the dollar was trading slightly lower at JPY142.71 compared to JPY142.75.

In Asia on Thursday, the Nikkei 225 index in Tokyo was up 1.4%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was up 1.4%. The S&P/ASX 200 in Sydney closed up 0.8%.

"Asian markets traded on a firmer note...after the first round of US-Japan trade talks," SPI's Stephen Innes commented. "The key market read? Japan may avoid steeper tariffs - and just as importantly, currency wasn't on the table.

"That gave the yen a reason to ease and let risk sentiment breathe a little on the export-heavy Tokyo exchange."

In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.7%, the S&P 500 down 2.2% and the Nasdaq Composite down 3.1%.

Federal Reserve Chair Powell has told the Economic Club of Chicago that tariffs are likely to push up prices and could put the central bank in the unenviable position of having to choose between tackling inflation and unemployment.

"Tariffs are highly likely to generate at least a temporary rise in inflation," Powell said, according to prepared remarks, warning that the inflationary effects "could also be more persistent".

Swissquote's Ipek Ozkardeskaya summarised: "[Powell] warned that the tariffs were significantly higher than they thought, that they could soften employment and boost inflation, that inflation could stick around longer than they thought, that they don't know how long the impacts will flow through the economy and how they will impact the long-term inflation expectations.

"He added that they can't achieve long-term strong growth and employment if they don't achieve price stability first. In simple words, Powell said inflation is their priority and that the best thing to do it to wait before cutting rates."

Brent oil was quoted higher at USD66.32 a barrel early in London on Thursday from USD65.73 late Wednesday.

Gold was quoted lower at USD3,322.39 an ounce against USD3,324.19, although Innes noted that the yellow metal is "still the go-to shelter in this storm of shifting alliances and tariff drama".

Still to come on Thursday's economic calendar is US initial jobless claims.

By Emma Curzon, Alliance News reporter

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