The FTSE 100 hit a new high on Monday, closing in touching distance of 9,000, outperforming European peers held back by the latest US tariff threats.
The FTSE 100 index closed up 56.94 points, 0.6%, at 8,998.06. It earlier hit a new all-time peak of 8,999.22.
The FTSE 250 ended up 111.52 points, 0.5%, at 21,724.77, and the AIM All-Share rose 0.50 of a point, 0.1%, at 774.05.
In European equities on Monday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended 0.4% lower.
US President Donald Trump on Saturday said major trading partners Mexico and the EU would face a 30% tariff starting next month, ramping up pressure for deals in his trade wars.
Both sets of duties would take effect August 1, Mr Trump said in separate letters posted to his Truth Social platform, citing Mexico’s role in illicit drugs flowing into the US and a trade imbalance with the EU respectively.
Despite this, the euro climbed against the dollar to 1.1683 euros on Monday afternoon UK time from 1.1549 euros on Friday.
Stephen Innes at SPI Asset Management said investors have “grown numb to these volleys, no longer pricing in Armageddon with each tweet or tariff leak”.
“Instead, the euro remains resilient, moving more in rhythm with hard data and issuance flows than the usual headline whiplash,” he added.
Barclays said if the US were to increase tariffs on EU goods up to 30%, “we would expect retaliation from the EU, a more prolonged and deeper economic slowdown, the ECB to cut policy rates to 1% by Q1 26, lower EUR core rates, EURUSD to come under pressure and the EU equity market resilience to be put to the test”.
The pound was quoted at 1.3446 dollars at the time of the London equities close on Monday, lower compared to 1.3503 dollars on Friday.
The Bank of England could make cuts to interest rates if the jobs market slows down, Governor Andrew Bailey has said.
Businesses are “adjusting employment” as a result of Chancellor Rachel Reeves’ decision to raise national insurance contributions for employers, Mr Bailey also told the Times.
Companies are “also having pay rises that are possibly less than they would have been if the NICs change hadn’t happened”, Mr Bailey said.
In an interview with the newspaper, the governor said the UK economy was growing behind its potential.
This could open up “slack” to bring down inflation, he said, meaning prices on goods would rise less swiftly compared with earnings in the future.
Mr Bailey said he believes the base rate set by the Bank of England would be lowered in the future, after it was held in June.
Brown Brothers Harriman noted the KPMG/REC permanent placement index dropped further into contraction territory at 39.1 in June versus 44.2 in May, and its gauge of staff availability rose the most since November 2020 to 66.1 versus 63.3.
The chief executive of the REC said that “much of that (hiring) hesitation stems from the scar tissue left by the spring tax hikes and fear of further business tax rises,” BBH noted.
BBH said UK labour market data Thursday will be closely watched for “confirmation of this deterioration”.
“Sluggish growth, a stalling labour market, and the likelihood of higher taxes could force the BOE to cut the policy rate more aggressively than anticipated. The swaps market sees 90% odds of an August cut and 75 bp of total easing over the next 12 months,” BBH pointed out.
Together with labour market data, UK inflation figures are due on Wednesday with CPI expected to remain at remain around 3.4% in June, roughly unchanged for the third consecutive month.
Against the yen, the dollar was trading higher at 147.52 yen compared to 147.34 yen.
Stocks in New York were mixed at the time of the London close on Monday. The Dow Jones Industrial Average was down 0.1%, as was the S&P 500 index, while the Nasdaq Composite edged up 0.2%.
The yield on the US 10-year Treasury was quoted at 4.44%, widening from 4.41%. The yield on the US 30-year Treasury was quoted at 4.98%, stretched from 4.93%.
On the FTSE 100, Associated British Foods rose 2.2% as Panmure Liberum upgraded to “buy” from “hold” after taking an in-depth look at the firm’s Sugar business.
The broker thinks Sugar is a “quality business that generates better returns than peers”, albeit one that has material short-term earnings risks.
On the FTSE 250, QinetiQ rose 3.8% ahead of its trading statement on Thursday, while Baltic Classifieds rose 2.6% after Bank of America upgraded to “buy” from “neutral”.
Ashmore advanced 1.4% as it reported an increase in assets under management during the final quarter of the financial year, amid strength in emerging markets and lower redemptions against a backdrop of trade and geopolitical tensions.
The London-based investment manager said assets under management increased by 1.4 billion dollars, or 3.0%, to 47.6 billion dollars at the end of June from 46.2 billion dollars at the end of March.
This was made up of 2.2 billion dollars from a positive investment performance against net outflows of 800 million dollars.
Ashmore said net flows improved in the period with “significantly lower” redemptions. Subscription levels were consistent, while risk appetite “generally remains subdued” given the backdrop of trade tensions and geopolitical uncertainty.
Brent oil fell to 69.57 dollars a barrel at the time of the London equities close on Monday, from 70.38 dollars late on Friday.
Gold was quoted lower at 3,347.47 dollars an ounce against 3,364.33 dollars.
The biggest risers on the FTSE 100 were Associated British Foods, up 45.0 pence, at 2,093.0p, Fresnillo, up 31.0p at 1,547.0p, National Grid, up 20.5p at 1,048.5p, AstraZeneca, up 206.0p at 10,656p and Standard Chartered, up 25.0p at 1,307.0p.
The biggest fallers on the FTSE 100 were Spirax Group, down 160.0p at 6,020.0p, JD Sports, down 1.54p at 86.12p, WPP, down 6.2p at 414.6p, Melrose, down 7.4p at 526.6p and Shell, down 35.5p at 2.636.5p.
Tuesday’s global economic calendar has China retail sales and industrial production data and US and Canadian inflation figures.
Tuesday’s UK corporate calendar has trading statements from housebuilder Barratt Redrow, retailer B&M European Retail, credit checker Experian and recruiter Robert Walters.
– Contributed by Alliance News.
