Stock prices in London experienced a downturn on Tuesday, largely influenced by ongoing speculation surrounding potential rate cuts from the US Federal Reserve. This follows the release of important industrial and retail data from the US, signaling fluctuations in market confidence.
The Federal Reserve began a two-day key policy meeting on Tuesday, coinciding with Stephen Miran’s confirmation as a Fed governor. Miran, previously a key advisor to former US President Donald Trump, was sworn in after a narrow Senate vote. Market observers are keenly watching whether he will advocate for more aggressive rate cuts in response to President Trump’s repeated calls for such actions.
The FTSE 100 index fell by 81.37 points, or 0.9%, closing at 9,195.66. The FTSE 250 also declined, ending down by 154.72 points, or 0.7%, at 21,491.87. In contrast, the AIM All-Share saw a slight uptick of 0.48 points, or 0.1%, closing at 767.87.
Despite expectations of significant US investments in the UK coinciding with Trump’s state visit, these announcements did not provide sufficient momentum to lift UK stock markets. Tech giant Alphabet, owner of Google, announced plans to invest £5 billion in AI-related infrastructure and scientific research in the UK. However, industry experts like AJ Bell’s Russ Mould noted that even potential domestic growth policies might not significantly uplift the UK stock indices, given that the FTSE 100 derives over two-thirds of its earnings from international markets.
In specific stock movements, mining giant Anglo American saw a 0.6% increase following the completion of its copper joint venture with Chile’s Codelco. However, student accommodation provider Unite Group’s shares dropped 1.7%, as the UK Competition & Markets Authority solicited comments regarding its proposed takeover of Empiric Student Property, signaling the start of a possible formal investigation.
On the FTSE 250, asset manager Pollen Street Group surged 3.0%, buoyed by a 28% rise in first-half pre-tax profits to £29.6 million, fueled by increasing demand in mid-market alternatives and asset-based lending. The firm also declared an interim dividend of 27.0 pence.
Notable gains were seen in Focusrite, a music and audio products company, which climbed 15% as it reported a resilient performance amidst challenging market conditions, with revenue increasing significantly.
Meanwhile, US markets reflected caution, with the Dow Jones Industrial Average and the S&P 500 both retreating, down 0.4% and 0.2% respectively. The yield on the US 10-year Treasury rose slightly to 4.05%.
US industrial production showed a modest rise of 0.1% in August, offsetting a previous decline, while retail sales showed a stronger-than-expected increase. Additionally, President Trump indicated that a deal regarding TikTok had been reached, hinting at easing trade tensions with China.
Across the European markets, the CAC 40 in Paris fell 1.0%, while the DAX 40 in Frankfurt plunged 1.8%. However, German industrial leader Thyssenkrupp’s shares gained 4.9% following news of a non-binding offer for its steel business.
In currency trading, the pound strengthened against the dollar, and Brent oil was quoted higher, reflecting broader shifts in the market.
For investors and market analysts, upcoming events include the Fed’s rate decision, UK and eurozone consumer inflation data, and notable corporate results from Barratt Developments and Games Workshop, indicating continued volatility and opportunities within the financial landscape.
