London close: Stocks finish higher as tariff ride rolls on

(Sharecast News) - London stocks ended higher on Tuesday, supported by resilient investor sentiment despite ongoing uncertainty surrounding trade policy developments in the United States.

The FTSE 100 index rose 0.54% to close at 8,854.18 points, while the FTSE 250 added 0.2% to finish at 21,581.68 points.

Gains came as markets digested the latest turn in US president Donald Trump's trade rhetoric.

Letters sent to key US trading partners reignited concerns over potential tariffs, although UK equities appeared to shrug off the geopolitical tension.

In currency markets, sterling edged lower, last trading down 0.2% on the dollar at $1.3675, and 0.22% lower against the euro, changing hands at �1.1594.

"Additional tariffs of 25% to 40% were imposed on 14 countries, including South Africa and Thailand," said Neil Wilson, UK investor strategist at Saxo Markets.

"Nothing has really changed - the real headline should be 'Trump extends trade truce' but retains enough stick to dangle the carrot effectively

"As far as these tariff letters go, it's unclear what is all that different from April."

Wilson said the only thing that seemed different was the deadline, which had once again been pushed back.

"So, of course, 'TACO' [Trump Always Chickens Out] - Trump said he was open to additional negotiations and that the new later deadline was 'not 100% firm', indicating he would look favourably on countries offering concessions.

"This is always the playbook so the market can overlook the theatrics."

Wilson pointed to the fact that US Treasury secretary Scott Bessent told CNBC that "several" trade deal announcements were likely in the next 48 hours.

"So far though, no deals, only letters," he quipped.

UK government finances under growing strain, US small business optimism declines

In economic news, the UK's fiscal outlook was under growing strain, according to the Office for Budget Responsibility (OBR), which warned earlier that the government's finances were in a "relatively vulnerable position" following a series of global economic shocks.

In its latest Fiscal Risks and Sustainability report, the OBR said the UK ended 2024 with the sixth-highest debt, fifth-highest deficit, and third-highest borrowing costs among 36 advanced economies.

The public deficit stood at 5.7% of GDP, well above the advanced economy average.

Despite repeated pledges to reduce borrowing, underlying debt has risen to 95% of GDP - the highest since the early 1960s - and was expected to climb further.

The OBR attributed much of the increase to the pandemic and energy crisis but warned that borrowing remained high and efforts to restore sustainability had largely failed.

It highlighted key risks ahead, including rising state pension costs, potential strain from private pension funds' demand for gilts, and the long-term fiscal impact of climate change and the net zero transition.

Across the Atlantic, optimism among small businesses in the US declined slightly in June after showing signs of recovery in May.

The National Federation of Independent Business said its optimism index edged down 0.2 points to 98.6.

Taxes emerged as the top concern, cited by 19% of business owners - the highest level since July 2021.

Expectations for improved business conditions and higher real sales also dipped.

Labour quality and costs remained persistent challenges.

Germany meanwhile reported a larger-than-expected drop in exports in May, with trade to the US and China both declining.

Monthly exports fell 1.4%, against forecasts for a 0.2% decline, while imports dropped 3.8%.

Exports to the US fell 7.7% from April and 13.8% year-on-year, as frontloading ahead of potential US tariffs faded.

ING's Carsten Brzeski said earlier export gains had been entirely reversed and warned that tariff risks and a strengthening euro were compounding pressure on German exporters.

Meanwhile, the Reserve Bank of Australia held interest rates at 3.85%, defying expectations of a cut.

Its decision was split, with six members voting to keep rates steady and three in favour of a reduction.

The RBA said it needed more data to confirm that inflation was tracking sustainably toward its 2.5% target.

While inflation indicators were broadly in line with forecasts, the central bank highlighted cost pressures in housing and durable goods.

Analysts said the hold likely reflected caution on timing, with a rate cut still possible at the RBA's next meeting in August.

Entain rises on broker upgrade, Victrex sinks

On London's equity markets, Entain climbed 2.42% after Bank of America upgraded the stock to 'buy' and raised its price target to 1,100p from 880p.

The bank pointed to a bullish outlook for BetMGM and strong iGaming trends.

Glencore also rose, up 2.84%, after JPMorgan Cazenove initiated coverage with an 'overweight' rating.

Close Brothers Group jumped 8.55% ahead of an expected ruling this month on motor finance commission arrangements, which could have major implications for the firm's lending business.

On the downside, Victrex sank 8.65% after warning that second-half underlying profits were likely to be flat compared to the first half.

The polymer manufacturer flagged ongoing weakness in its medical segment, production delays at its new China facility, and adverse currency movements.

Chief executive officer Jakob Sigurdsson said volume growth in the third quarter was offset by a softer medical performance and unfavourable sales mix.

Unite Group edged 0.49% lower despite confirming full-year guidance for adjusted EPRA earnings per share.

The student housing provider reported continued booking momentum, with 85% of beds already let for the 2025-2026 academic year.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,854.18 0.54%

FTSE 250 (MCX) 21,581.68 0.20%

techMARK (TASX) 5,116.82 0.36%

FTSE 100 - Risers

BP (BP.) 383.70p 3.21%

Glencore (GLEN) 306.40p 2.85%

Prudential (PRU) 924.20p 2.62%

Standard Chartered (STAN) 1,250.00p 2.50%

Schroders (SDR) 377.60p 2.50%

Entain (ENT) 932.20p 2.42%

Diageo (DGE) 1,939.50p 2.05%

Shell (SHEL) 2,604.00p 2.00%

Airtel Africa (AAF) 183.90p 1.77%

Croda International (CRDA) 3,004.00p 1.56%

FTSE 100 - Fallers

Rentokil Initial (RTO) 343.00p -2.61%

Coca-Cola HBC AG (CDI) (CCH) 3,912.00p -2.35%

LondonMetric Property (LMP) 194.60p -1.62%

Coca-Cola Europacific Partners (DI) (CCEP) 7,010.00p -1.54%

Fresnillo (FRES) 1,469.00p -1.34%

Phoenix Group Holdings (PHNX) 635.50p -1.32%

Admiral Group (ADM) 3,308.00p -1.25%

Land Securities Group (LAND) 591.50p -1.25%

United Utilities Group (UU.) 1,092.50p -1.09%

Pershing Square Holdings Ltd NPV (PSH) 4,088.00p -1.06%

FTSE 250 - Risers

Close Brothers Group (CBG) 411.20p 8.55%

XPS Pensions Group (XPS) 382.00p 4.66%

Ithaca Energy (ITH) 160.20p 4.16%

Jupiter Fund Management (JUP) 107.40p 3.87%

Ibstock (IBST) 149.60p 3.46%

Trustpilot Group (TRST) 245.80p 3.36%

OSB Group (OSB) 551.50p 3.27%

RS Group (RS1) 588.50p 2.71%

PayPoint (PAY) 828.00p 2.60%

IP Group (IPO) 55.30p 2.60%

FTSE 250 - Fallers

Victrex plc (VCT) 720.00p -8.40%

W.A.G Payment Solutions (WPS) 80.40p -4.29%

Plus500 Ltd (DI) (PLUS) 3,170.00p -3.94%

Endeavour Mining (EDV) 2,214.00p -3.32%

Spire Healthcare Group (SPI) 221.00p -2.43%

CMC Markets (CMCX) 248.50p -1.97%

QinetiQ Group (QQ.) 493.60p -1.87%

Burberry Group (BRBY) 1,234.00p -1.75%

Foresight Environmental Infrastructure Limited (FGEN) 82.00p -1.68%

Tritax Big Box Reit (BBOX) 142.60p -1.66%