London close: Stocks finish higher on raft of corporate earnings

(Sharecast News) - London stocks closed slightly higher on Tuesday, buoyed by strong corporate earnings from several blue-chip firms despite fresh signs of weakness in the UK's service sector and subdued investor sentiment ahead of the Bank of England's next rate decision.

The FTSE 100 index rose 0.16% to close at 9,142.73 points, while the FTSE 250 added 0.19% to 21,901.69.

Gains were led by Smith & Nephew, Fresnillo, Diageo, and BP, whose well-received results helped offset broader concerns about slowing economic activity.

The pound strengthened against both the dollar and euro, trading at $1.3314 and �1.1495 respectively.

"UK stocks erased early gains on Tuesday, initially boosted by positive earnings from Diageo and Smith &Nephew, while anticipations of a Bank of England interest rate reduction later this week provided additional encouragement," said TickMill market strategy partner Patrick Munnelly.

"However, investors reduced risk heading into the close."

UK services sector loses steam, eurozone prices rise amid modest growth

In economic news, new data showed growth in the UK services sector slowed in July, with the S&P Global services purchasing managers' index (PMI) falling to 51.8 from 52.8 in June.

Though still above the 50.0 mark that separates growth from contraction, the data revealed a sharp fall in new orders - the steepest since November 2022 - and the fastest pace of job losses since February.

Tim Moore, economics director at S&P Global Market Intelligence, noted, "Risk aversion and low confidence among clients were the main reasons provided for sluggish sales pipelines," adding that firms were reluctant to hire due to worries over rising payroll costs.

Despite these headwinds, optimism improved, supported by easing US tariff concerns and hopes for interest rate cuts to stimulate spending in the second half of 2025.

The weak data added pressure on the Bank of England, which is widely expected to cut interest rates from 4.25% to 4% at its next meeting, marking its fifth reduction in the current cycle.

However, above-target inflation could prompt some policymakers to hold steady.

Across the channel, eurozone business activity saw a modest pickup in July.

The HCOB composite PMI rose to 50.9 from 50.6, signaling mild expansion.

Meanwhile, producer prices increased by 0.8% month-on-month in June, according to Eurostat, while annual PPI growth remained muted at 0.6% across both the eurozone and broader EU.

Corporate updates lift sentiment in equity markets

On London's equity markets, shares in Smith & Nephew surged 15.34% after the medical technology firm reported strong first-half results, reaffirmed full-year guidance, and announced a $500m share buyback.

Russ Mould, investment director at AJ Bell, said the results suggested the company "may now firmly be on the mend," highlighting improving profitability and cash flow.

Fresnillo jumped 6% as the miner posted a 102% rise in first-half EBITDA to $1.1bn, driven by higher metals prices and solid operational execution.

Mould added, "Fresnillo has got a big boost from higher precious metals prices ... [but] is also doing well operationally and keeping a tight rein on costs."

BP rose 2.81% after beating earnings expectations and increasing its dividend.

The oil major reported an underlying replacement cost profit of $2.35bn for the second quarter, down from $2.76bn a year ago but ahead of the $1.81bn analyst consensus.

The company also announced a review of its assets and costs under new chair Albert Manifold.

"Investors will be pleased to see there is no resting on its laurels," Mould said, as BP looked to reassure shareholders and fend off activist pressure.

Distilling giant Diageo advanced 4.9% despite reporting a 27.8% drop in full-year operating profit.

Investors welcomed resilient net sales and signs of growth in four of its five key markets.

While challenges remained, particularly in Asia, Diageo's ability to raise prices and maintain volumes was seen as a positive indicator.

Other gainers included Keller Group, up 3.49%, and Rotork, ahead 6.57%, following earnings updates, while Travis Perkins rose 5.61% despite a dip in first-half profit, as investors welcomed its full-year outlook.

On the downside, Domino's Pizza Group plummeted 17.56% after cutting its full-year core profit forecast, citing a tougher operating environment and declining consumer confidence.

Supermarkets also lagged, with Tesco down 0.82% and J Sainsbury off 0.74%.

"The FTSE 100 has its recent record highs in its sights again as global markets shake off the latest tariff turmoil," said AJ Bell's Mould, noting that robust results from UK firms suggested resilience amid global uncertainty.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 9,142.73 0.16%

FTSE 250 (MCX) 21,901.69 0.19%

techMARK (TASX) 5,298.21 0.94%

FTSE 100 - Risers

Smith & Nephew (SN.) 1,331.00p 15.34%

Fresnillo (FRES) 1,520.00p 6.00%

Diageo (DGE) 1,904.00p 4.90%

Melrose Industries (MRO) 575.00p 4.89%

BP (BP.) 417.45p 2.81%

Mondi (MNDI) 1,061.50p 2.46%

Croda International (CRDA) 2,647.00p 2.20%

London Stock Exchange Group (LSEG) 9,804.00p 1.74%

Beazley (BEZ) 901.50p 1.52%

IMI (IMI) 2,178.00p 1.30%

FTSE 100 - Fallers

Relx plc (REL) 3,814.00p -2.31%

Lloyds Banking Group (LLOY) 80.76p -2.18%

3i Group (III) 4,029.00p -2.04%

CRH (CDI) (CRH) 7,228.00p -1.90%

Games Workshop Group (GAW) 16,040.00p -1.84%

Experian (EXPN) 3,859.00p -1.78%

Haleon (HLN) 349.80p -1.69%

Rolls-Royce Holdings (RR.) 1,073.00p -1.56%

Babcock International Group (BAB) 1,003.00p -1.08%

Airtel Africa (AAF) 207.20p -1.05%

FTSE 250 - Risers

Oxford Nanopore Technologies (ONT) 215.60p 9.38%

Close Brothers Group (CBG) 525.00p 6.84%

Rotork (ROR) 336.60p 6.57%

Travis Perkins (TPK) 565.00p 5.61%

PPHE Hotel Group Ltd (PPH) 1,706.00p 4.92%

Mitie Group (MTO) 149.00p 4.63%

Keller Group (KLR) 1,364.00p 3.49%

Clarkson (CKN) 3,700.00p 3.06%

Playtech (PTEC) 427.50p 3.01%

Wizz Air Holdings (WIZZ) 1,334.00p 3.01%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 202.80p -17.56%

Raspberry PI Holdings (RPI) 406.50p -4.52%

Senior (SNR) 180.00p -3.85%

4Imprint Group (FOUR) 3,615.00p -3.21%

JTC (JTC) 924.00p -2.63%

Ocado Group (OCDO) 340.00p -2.61%

Auction Technology Group (ATG) 367.50p -2.26%

Foresight Solar Fund Limited (FSFL) 86.60p -2.26%

Wetherspoon (J.D.) (JDW) 728.00p -2.08%

Carnival (CCL) 2,007.00p -1.81%