(Sharecast News) - London stocks ended flat on Tuesday, as investors stuck to the sidelines ahead of the latest policy announcement from the Federal Reserve, but WPP surged on news of a government contract win.
The FTSE 100 closed steady at 9,642.01.
Chris Beauchamp, chief market analyst at IG, said: "The 48 hours before a Fed decision is rarely a good time to make short-term investment decisions. The week so far has been indecisive at best, but early trading in the US has seen some tentative buying.
"Trump's decision to allow Nvidia to hawk its most sophisticated chips to China gave the stock a boost overnight, but that bounce is fading. Meanwhile Trump's Fed pick Hassett has been banging the drum for the US economy, but it seems investors would rather focus on the existing Fed chair, at least until after tomorrow's decision."
On home turf, data released earlier by the British Retail Consortium and KPMG showed that retail sales growth slowed to its lowest in six months in November as cautiousness ahead of the Autumn Budget resulted in an underwhelming Black Friday promotional period.
Total retail sales increased at a year-on-year rate of 1.4% last month, down from 1.6% in October and 2.3% in September.
The slowdown came despite inflation remaining elevated, reflecting "pre-Budget jitters among shoppers", according to Helen Dickinson, chief executive of the BRC.
Food sales were up 3.0% over last year, slowing slightly from the 3.% year-on-year growth seen in October.
Meanwhile, non-food sales rose just 0.1%, in line with the previous month, with 0.5% growth online offsetting a 0.3% decline in-store.
"Not unexpectedly, online dominated, with the proportion of non-food bought online reaching its highest level since 2022. Many consumers took advantage of promotions, with homeware and upholstery selling well ahead of festive hosting. Fashion lagged, especially with the mild first half of November dampening demand for winterwear," Dickinson said.
Elsewhere, figures from Worldpanel showed that grocery inflation held steady at 4.7% in the four weeks to 30 November.
Worldpanel by Numerator said retailers were ramping up investment in promotions to encourage shoppers through their doors in the run-up to Christmas, with sales expected to exceed 13.6bn in December.
Fraser McKevitt, head of retail and consumer insight at Worldpanel, said: "Retailers are pulling out all the stops to win shoppers over as they gear up for one of the most important trading periods of the year. One in five households tell us that they've been struggling financially and that's been largely consistent over the past two years.
"With the cost of living still biting for many this Christmas, just under one third of all spending is on promotion as supermarkets find ways to shield shoppers from the impact of price rises."
Ahead of the Fed announcement, data from the Bureau of Labour Statistics showed the number of US job openings ticked marginally higher in October.
The Job Openings and Labor Turnover Survey (JOLTS) - a key measure of labour demand for the Fed - showed that openings nudged up to 7.67m from 7.66m in September. The release of the data was delayed due to the government shutdown.
Elsewhere, a weekly update from the ADP National Employment Report showed private sector employers added an average of 4,750 jobs per week in the four weeks to 22 November.
In equity markets, WPP jumped to the top of the FTSE 100 index after the advertising giant reportedly secured a major government contract worth around 2bn.
According to The Times and trade magazine Campaign, WPP-owned agency Wavemaker has landed the four-year contract with the Cabinet Office following a competitive tender process.
Defence companies were in the black again, with BAE Systems and Babcock both up amid news that German lawmakers are set to approve a record 52bn in defence orders. "Whether there is peace in Ukraine or not, Europe is rearming fast and for the long haul," said Neil Wilson, UK investor strategist at Saxo Markets.
Man Group was boosted by an upgrade to 'overweight' from 'neutral' at JPMorgan.
Defence group Chemring rose as it reported a sharp jump in annual profit as governments increased military spending amid the growing threat from Russia and dwindling support from the US under the Trump administration.
Online greeting card and gifts retailer Moonpig ended lower, having rallied earlier in the day after it posted a rise in first-half profit and revenue, pointing to continued momentum at the Moonpig brand and a return to growth at Greetz.
British American Tobacco ended just a smidgen weaker, recovering from earlier heavier losses after it said its 2026 performance was expected to be at the lower end of the range of its mid-term targets.
Equipment rental firm Ashtead nudged lower as it outlined plans to return $1.5bn to shareholders and reaffirmed its full-year outlook, despite a dip in interim profits.
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