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London stocks on the FTSE 100 rose in early trade on Tuesday as concerns about Moody’s US credit rating downgrade faded.
At 0855 BST, the FTSE 100 was 0.3% higher at 8,721.70.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Renewed hopes for a ceasefire between Ukraine and Russia, combined with another wave of stimulus for China’s economy has provided optimism in early trading. The FTSE 100 and European indices have opened higher as geopolitical tensions look set to ease.
“Following a call with Putin, President Trump was bullish about negotiations for a ceasefire between Ukraine and Russia starting immediately. The renewed rush for safe havens sparked by the US credit rating downgrade, has reversed, with gold falling back as investors have more appetite for equities. Of course, hanging on the words of unpredictable leaders isn’t solid ground, and hopes for a ceasefire have risen before, only to be dashed. Russia has indicated that any progress is likely to be slow, with Putin talking about a ‘memorandum on a possible future peace agreement’.
“Nevertheless, for now it’s being seen as progress. If a deal is reached, it could pave the way for sanctions relief for Russia, and its crude supplies to flow more freely into world markets. That possibility of higher supplies globally is pushing down the price of Brent, which is trading around $65 a barrel.
“The People’s Bank of China has injected a dose of more stimulus into the economy, by cutting a key lending rate to a record low. It wasn’t a surprise move – the central bank was expected to make the change, given the monetary easing push announced this month.”
In equity markets, Diploma surged to the top of the FTSE 100 as it lifted its full-year organic revenue growth and operating margin guidance following a strong first half.
Centrica gained after North Sea operator Ithaca Energy bought an additional 46.25% stake in the Cygnus gas field from Spirit Energy in a £116m deal.
Smiths Group advanced after saying it now expects full-year revenue growth to be towards the top end of its guidance amid strong demand.
Vodafone was in the black despite saying it swung to a full-year operating loss, as it also said it expects Germany to return to top-line growth this year and announced a new €2bn share buyback.
Bakery chain Greggs was the top performer on the FTSE 250 as it held annual guidance after reporting a 2.9% rise in like-for-like sales in the first 20 weeks of the year, with an improved performance in the last 11 weeks supported by better trading conditions.
Upper Crust owner SSP and supermarket supplier Cranswick also rose after results.
On the downside, B&Q and Castorama owner Kingfisher was knocked lower by a downgrade to ‘underweight’ at Barclays.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Diploma Plc | +17.24% | +728.00 | 4,950.00 |
| 2 |  |
Smiths Group Plc | +3.89% | +80.00 | 2,134.00 |
| 3 |  |
South32 Limited | +3.09% | +4.40 | 146.80 |
| 4 |  |
Aib Group Plc | +2.56% | +14.00 | 560.00 |
| 5 |  |
Wise Plc | +2.18% | +24.00 | 1,123.00 |
| 6 |  |
Lloyds Banking Group Plc | +1.95% | +1.48 | 77.32 |
| 7 |  |
Banco Santander S.a. | +1.90% | +11.00 | 590.00 |
| 8 |  |
Centrica Plc | +1.88% | +2.85 | 154.85 |
| 9 |  |
Sainsbury (j) Plc | +1.85% | +5.20 | 286.00 |
| 10 |  |
Sse Plc | +1.71% | +30.00 | 1,783.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Limited | -1.36% | -25.50 | 1,856.00 |
| 2 |  |
Antofagasta Plc | -1.31% | -23.50 | 1,776.50 |
| 3 |  |
Rentokil Initial Plc | -0.74% | -2.60 | 350.30 |
| 4 |  |
Barratt Redrow Plc | -0.72% | -3.40 | 467.90 |
| 5 |  |
Intercontinental Hotels Group Plc | -0.53% | -48.00 | 8,928.00 |
| 6 |  |
Wheaton Precious Metals Corp. | -0.50% | -30.00 | 5,940.00 |
| 7 |  |
The Sage Group Plc | -0.41% | -5.00 | 1,224.50 |
| 8 |  |
Flutter Entertainment Plc | -0.35% | -65.00 | 18,550.00 |
| 9 |  |
Diageo Plc | -0.33% | -7.00 | 2,125.00 |
| 10 |  |
Intermediate Capital Group Plc | -0.29% | -6.00 | 2,050.00 |
US close: Stocks erase losses as bond yields ease
US stock markets shrugged off a shaky start to finish marginally higher on Monday despite concerns surrounding the impact of a downgrade of the creditworthiness of America’s debt.
The late rally came as US bond yields eased, following a strong surge earlier in the session. The yield on a 10-year US Treasury was down 3 basis points at 4.454% by the close on Wall Street, having jumped 8.2bp to a high of 4.566% when stock markets opened.
As a result, the Dow finished 0.3% higher, the S&P 500 gained 0.1% while the Nasdaq finished broadly flat, with all three indices opening firmly in the red. For the S&P 500 in particular, this was the index’s fifth straight day in positive territory.
Tax bills and credit ratings
Some market participants said that sentiment was being supported by the news that President Trump’s tax bill was approved by the House Budget Committee on Sunday. This was the bill’s key first hurdle, though the proposed tax cuts still remain months away from becoming a reality.
Making headlines on Monday was Moody’s decision to cut its rating on US government debt from the highest rating Aaa to Aa1 as a result of the country’s eye-watering $36trn debt pile and growing interest costs. The downgrade means that none of the three major credit ratings agencies now rate US debt as the highest quality.
“Over more than a decade, US federal debt has risen sharply due to continuous fiscal deficits. During that time, federal spending has increased while tax cuts have reduced government revenues. As deficits and debt have grown, and interest rates have risen, interest payments on government debt have increased markedly,” Moody’s said.
Speaking on Monday, the head of the Federal Reserve Bank of Atlanta said that the Moody’s downgrade complicates the outlook for inflation in the US. “These things will potentially have implications on prices down the road that we’re going to have to pay attention to,” said Raphael Bostic.
Also in focus were comments from Treasury secretary Scott Bessent who warned that the US could once again lift trade tariffs on some countries if they fail to meet at the negotiating table “in good faith”. His warning came after the president announced on Friday that the administration would be sending letters to some 150 trading partner countries “telling people what they will be paying to do business in the United States”.
Market movers
Walmart was continuing to decline after Doug McMillon – who last week warned consumers that they would face higher prices at the till because of Trump’s trade tariffs – said the retailer would try to absorb some of the impact. Trump said at the weekend that Walmart should “eat the tariffs”.
Tesla was under pressure with Xiaomi expected to unveil plans later this week for a new Yu7 SUV – a model widely seen as a challenger to Tesla’s Model Y.
Meanwhile, Reddit was hit by a Wells Fargo downgrade to ‘equal weight’, while Netflix was weighed down by a ratings cut by JPMorgan to ‘neutral’.
Shares in TXNM Energy were on the rise after Blackstone Infrastructure announced plans to buy the New Mexico-based electricity provider for $11.5bn.
Tuesday newspaper round-up: Post Office, factories, ISAs
Hundreds of former sub-postmasters will reportedly be compensated by the Post Office after it accidentally leaked their names and addresses in June 2024. According to the BBC, the Post Office has confirmed that individual payouts will be capped at £5,000 although higher claims may still be pursued. It comes almost a year after 555 victims of the Horizon IT scandal had their personal details published on a website. – Guardian
The number of billionaires in the UK has grown sharply – from 15 in 1990 to 165 in 2024 – at the same time as inequality in the UK’s overall wealth distribution has dramatically increased, analysis has found. Timed to coincide with the Sunday Times’ rich list, the Equality Trust’s investigation also found that billionaires have become “ludicrously” more wealthy, with their average wealth rocketing by more than 1,000% over the same period. – Guardian
Factories face higher taxes under Sir Keir Starmer’s EU “reset” deal amid warnings that heavy industry is already being crushed by sky-high energy costs. The Prime Minister has agreed to work with Brussels to link the UK and EU markets for so-called carbon credits, a form of taxation where industrial businesses are charged for any CO2 emissions over an allowed limit. – Telegraph
Rachel Reeves has backed down on plans to reduce the tax-free Isa savings allowance, as she bowed to mounting pressure from the City. The Chancellor has confirmed that she will not change the £20,000 annual limit on Isas, in a move that will benefit millions of savers. – Telegraph
EY’s audit of NMC Health before its collapse due to alleged internal fraud was “deficient in multiple respects” and the failings “extremely serious”, according to an investigation by the accounting regulator. The provisional findings of a report by the Financial Reporting Council (FRC) were referenced in written submissions at the start of the High Court trial against EY, the Big Four accounting firm, on Monday by insolvency practitioners at Alvarez & Marsal, the administrators of NMC, a former FTSE 100 company. – The Times
