Source: Sharecast
The FTSE 100 index rose 0.69% to close at 8,778.05 points, while the FTSE 250 climbed 1.11% to finish at 20,938.58 points.
In currency markets, sterling was last down 0.44% on the dollar to trade at $1.3504, while it edged up 0.09% against the euro, changing hands at €1.1923.
“UK and US investors returned from their respective long weekends with a spring in their step thanks to the abrupt decision to pause higher tariffs on the EU,” said IG chief market analyst Chris Beauchamp.
“The half-life of each tariff increase continues to get shorter and shorter, and traders continue to fade the move.
“While the DAX pushes on to a new record high, the FTSE 100 finds itself around 100 points away from its own peak.”
Beauchamp added that it was “unwise” to hope that all upcoming US data would be as encouraging as Tuesday’s confidence figure, but said it was “certainly a relief” that US consumers had managed to maintain a sunny outlook.
“An early wobble for Wall Street on the open gave way to more gains, though of course there is still tomorrow’s hurdle of Nvidia earnings to navigate.”
UK data paints mixed economic picture, IMF raises UK growth forecast
UK economic data painted a mixed picture on Tuesday, with retail sentiment falling sharply even as broader indicators in Europe suggested tentative signs of recovery.
The Confederation of British Industry reported the steepest decline in UK retail sentiment in five years, with its business sentiment gauge dropping to -29% in May from -19% in February.
It said the year-on-year retail sales balance also weakened significantly, while expectations for June sales deteriorated further.
“This was a fairly downbeat survey and highlights some of the challenges facing the retail and wider distribution sector,” said CBI lead economist Ben Jones.
“In contrast to other recent retail data, this survey suggests parts of the sector are still struggling with fragile consumer demand, though online sales seem to be holding up better.
“Firms are also feeling the impact of higher NICs and the National Living Wage increase.”
Separately, the British Retail Consortium said shop price deflation held steady at -0.1%, though food inflation rose for the fourth consecutive month, highlighting continued pressure on household budgets.
“Fresh foods were the main driver [of rising food price inflation], and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased,” said Helen Dickinson, chief executive of the BRC.
“Non-food prices remained in deflation, but this slowed in categories such as fashion and furniture as retailers began to unwind heavy promotional activity.
“Prices were falling faster for electricals as retailers tried to encourage spending before any potential knock-on impact from US tariffs.”
The International Monetary Fund slightly raised its 2025 UK growth forecast to 1.2% from 1.1%, citing stronger-than-expected first-quarter performance.
However, it warned that rising global trade tensions, particularly those linked to US tariff threats, could weigh on the UK economy next year.
The IMF also urged the Chancellor, Rachel Reeves, to consider relaxing her fiscal rules to prevent emergency public service cuts.
It said current constraints risked forcing abrupt policy shifts if economic conditions deteriorated, and called for changes to the UK’s fiscal assessment framework to allow for more flexibility.
In the eurozone, economic sentiment improved modestly in May after two months of decline.
The European Commission’s economic sentiment indicator rose to 95.2 in the EU and 94.8 in the euro area, still below the long-term average of 100.
Gains were led by rebounds in retail and consumer confidence, particularly in Italy and Germany, although sentiment weakened in France and several other economies.
Employment expectations also improved slightly, though consumer fears over job security ticked higher.
German consumer confidence rose for a third consecutive month, reaching its highest level since November, according to a survey by NIQ and the Nuremberg Institute.
The index climbed to -19.9 for June, supported by improving income expectations.
However, consumers remain cautious, with reduced willingness to spend and increased intentions to save, reflecting continued uncertainty despite a better economic outlook.
Defence and industrial stocks rise, gold miners in the red
On London’s equity markets, defence and industrial stocks led gains on Tuesday, buoyed by rising expectations of increased NATO defence spending and positive corporate updates.
Melrose Industries climbed 3.7%, BAE Systems added 2.6%, and Rolls-Royce Holdings rose 0.93%, as investors positioned ahead of next month’s NATO summit, where member states were widely expected to commit to higher military budgets.
Elementis surged 11.4% after announcing the $121m sale of its Talc business to Italy’s IMI Fabi and launching a £50m share buyback.
Jupiter Fund Management jumped 9.9% after Peel Hunt upgraded the stock to ‘add’ from ‘hold’, citing anticipated cost savings as a welcome boost to profitability.
Burberry rose 5.3% following an upgrade from Barclays, which noted reduced risks of brand dilution.
Premier Inn owner Whitbread gained 1.7% after naming Christine Hodgson as its next chair, succeeding Adam Crozier.
Bodycote advanced 5.1% after reaffirming its full-year outlook, despite a year-on-year decline in group revenues.
Shares in Aston Martin Lagonda were up 3.9% on optimism over a potential US trade deal and news that CEO Adrian Hallmark had purchased nearly 200,000 shares.
On the downside, Premier Foods dipped 1.2% following a downgrade by RBC Capital Markets.
Mining stocks weakened as gold prices retreated, with Fresnillo down 2.1%, Endeavour Mining off 1.3%, and Hochschild Mining tumbling 5.7%.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,778.05 0.69%
FTSE 250 (MCX) 20,938.58 1.11%
techMARK (TASX) 4,822.34 1.38%
FTSE 100 - Risers
Melrose Industries (MRO) 476.50p 5.56%
International Consolidated Airlines Group SA (CDI) (IAG) 334.30p 4.53%
Intermediate Capital Group (ICG) 2,018.00p 3.17%
Ashtead Group (AHT) 4,348.00p 3.11%
BAE Systems (BA.) 1,900.00p 3.09%
Marks & Spencer Group (MKS) 383.70p 2.27%
Schroders (SDR) 348.00p 2.23%
Entain (ENT) 746.60p 2.05%
Land Securities Group (LAND) 623.00p 2.05%
St James's Place (STJ) 1,109.00p 2.02%
FTSE 100 - Fallers
Centrica (CNA) 156.15p -1.54%
Rio Tinto (RIO) 4,498.50p -1.40%
Experian (EXPN) 3,742.00p -1.21%
Fresnillo (FRES) 1,127.00p -0.97%
Pearson (PSON) 1,200.50p -0.95%
Games Workshop Group (GAW) 15,300.00p -0.84%
Auto Trader Group (AUTO) 901.40p -0.77%
Rightmove (RMV) 756.00p -0.74%
National Grid (NG.) 1,085.50p -0.50%
British American Tobacco (BATS) 3,319.00p -0.48%
FTSE 250 - Risers
Elementis (ELM) 146.00p 11.38%
Jupiter Fund Management (JUP) 90.10p 9.88%
W.A.G Payment Solutions (WPS) 65.60p 7.19%
Bridgepoint Group (Reg S) (BPT) 288.20p 6.98%
Vistry Group (VTY) 624.00p 5.73%
Carnival (CCL) 1,560.00p 5.33%
Burberry Group (BRBY) 1,013.00p 5.32%
Bodycote (BOY) 556.00p 5.13%
QinetiQ Group (QQ.) 489.00p 4.89%
Oxford Nanopore Technologies (ONT) 131.90p 4.60%
FTSE 250 - Fallers
Hochschild Mining (HOC) 273.20p -5.66%
Ferrexpo (FXPO) 58.80p -2.65%
Bakkavor Group (BAKK) 204.00p -2.39%
Pacific Horizon Inv Trust (PHI) 585.00p -2.01%
Fidelity China Special Situations (FCSS) 246.00p -1.79%
Caledonia Investments (CLDN) 3,570.00p -1.65%
Syncona Limited NPV (SYNC) 84.70p -1.51%
NextEnergy Solar Fund Limited Red (NESF) 65.30p -1.51%
Johnson Matthey (JMAT) 1,704.00p -1.50%
Endeavour Mining (EDV) 2,230.00p -1.33%