London close: Stocks rise despite renewed trade tensions

(Sharecast News) - London stocks closed higher on Monday, buoyed by geopolitical trade developments after US president Donald Trump announced plans to impose 30% tariffs on imports from the European Union and Mexico. The FTSE 100 index gained 0.64% to end the session at 8,998.06 points, while the more domestically-focussed FTSE 250 advanced 0.52% to 21,724.77 points.

In currency markets, sterling was weaker, trading down 0.39% on the dollar at $1.3440, and slipping 0.17% against the euro to change hands at €1.1522.

"The week begins with tariffs once again dominating the agenda for financial markets as US president Donald Trump suggests imports from Mexico and the European Union will be hit by levies of 30% from the beginning of August," said AJ Bell investment analyst Dan Coatsworth.

"Unlike their counterparts across the Channel, British companies should be able to operate with greater certainty around trade, and exports may be diverted through the UK.

"This might act as a push for foreign companies to invest in manufacturing and logistics facilities in the UK."

Coatsworth quipped that recent months had shown that "a lot can change on a daily basis, let alone over several weeks", meaning investors would be watching closely ahead of Trump's latest tariff deadline of 1 August.

"Having risen sharply at the end of last week on warnings of a tighter market than is perceived and speculation about Russian sanctions, oil traders were bracing themselves for news from the White House.

"The Trump administration is set to make an announcement on energy policy which could encompass sanctions and a shift in the management of the country's Strategic Petroleum Reserve.

"With the big US banks set to kick off the second-quarter earnings season in the US tomorrow, corporate news was thin on the ground at the start of the week."

UK labour market shows signs of softening, could lead to deeper rate cuts

In economic news, the UK labour market showed further signs of softening in June, with a key survey indicating the sharpest rise in candidate availability in over four years.

According to the latest KPMG and Recruitment and Employment Confederation (REC) Report on Jobs, the index for labour supply rose to 66.1 in June from 63.3 in May, the highest since November 2020.

The uptick was attributed to rising redundancies and lower hiring appetite, which also contributed to weaker wage growth.

Permanent staff appointments fell at the fastest pace in nearly two years, while temporary billings posted their steepest drop in four months, as firms grew cautious amid economic uncertainty and rising costs.

Bank of England governor Andrew Bailey said the loosening labour market could justify deeper interest rate cuts in the coming months.

In an interview with the Times, Bailey pointed to "consistent" evidence that companies were adjusting staffing levels following April's rise in employer National Insurance contributions.

He said this slack in the labour market would support further disinflation, and while he reiterated the Bank's preference for a "gradual and careful" approach, he acknowledged that a sharper economic slowdown could warrant more aggressive cuts.

Inflation currently stands at 3.4%, well above the Bank's 2% target.

The next policy decision is due on 7 August, with markets now pricing in a higher probability of a third 25 basis point cut this year.

Meanwhile, trade tensions between the European Union and the United States deepened after Donald Trump threatened to impose a 30% tariff on all EU imports from 1 August, targeting sectors including automotive.

The EU had planned retaliatory tariffs on €21bn worth of US goods this week but delayed their introduction until August in hopes of reviving negotiations.

EU trade commissioner Maros Sefcovic warned that tariffs at that level would be "prohibitive" and could severely disrupt transatlantic commerce.

Shares in German carmakers, heavily exposed to US markets, came under pressure amid the deteriorating outlook.

In Asia, Chinese export growth exceeded expectations in June, with outbound shipments rising 5.8% year-on-year, according to customs data.

The increase came as firms moved quickly to benefit from a temporary tariff ceasefire with the United States that is set to expire in August.

Imports also rose, up 1.1%, marking the first annual gain this year.

Rare earth exports surged by 32% following recent international trade deals.

While trade with the US remained in decline, the 16.1% drop in exports to the US was a notable improvement on May's 34.5% contraction, highlighting how exporters were taking advantage of the short-lived easing in trade restrictions.

AB Foods and gold miners in the green, DCC falls

On London's equity markets, Associated British Foods rose 1.95% after Panmure Liberum upgraded the Primark owner to 'buy' from 'hold' and lifted its price target to 2,600p from 1,900p.

The broker said the market was underestimating the recovery potential in the group's sugar division, with improvements already underway in underperforming areas.

Precious metals miners were among the top performers as gold and silver prices advanced.

Fresnillo gained 1.72% while Hochschild Mining climbed 2.85%, buoyed by rising commodity prices.

Ashmore Group added 1.43% after reporting a $1.4bn increase in assets under management in the quarter to 30 June.

The increase reflected $2.2bn in positive investment performance, offset by $800m in net outflows.

Asia-focused banks and insurers also advanced, with Standard Chartered up 1.79% and Prudential ahead 1.61% after data showed that Chinese exports rose in June.

The jump reflected a rush by exporters to take advantage of a temporary trade truce with the United States.

Wizz Air rose 1.94% after announcing plans to exit its Abu Dhabi joint venture and refocus on core European markets.

AstraZeneca gained 2.03% after announcing that its Baxdrostat drug for treatment-resistant hypertension had met both primary and secondary endpoints in a phase three trial, delivering a significant reduction in systolic blood pressure.

British Airways and Iberia parent IAG also climbed 2.03% after JPMorgan named it a top pick among European airlines and placed the stock on 'positive catalyst watch' for the second half of the year.

On the downside, DCC slipped 1.1% after agreeing to sell its UK and Ireland Info Tech business to private equity firm Aurelius for around £100m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,998.06 0.64% FTSE 250 (MCX) 21,724.77 0.52% techMARK (TASX) 5,182.15 0.79%

FTSE 100 - Risers

Tesco (TSCO) 409.80p 2.17% National Grid (NG.) 1,049.00p 2.04% International Consolidated Airlines Group SA (CDI) (IAG) 376.80p 2.03% AstraZeneca (AZN) 10,662.00p 2.03% Associated British Foods (ABF) 2,088.00p 1.95% Babcock International Group (BAB) 1,089.00p 1.86% Standard Chartered (STAN) 1,305.00p 1.79% Imperial Brands (IMB) 2,965.00p 1.72% Fresnillo (FRES) 1,542.00p 1.72% United Utilities Group (UU.) 1,110.00p 1.65%

FTSE 100 - Fallers

Spirax Group (SPX) 6,020.00p -2.59% JD Sports Fashion (JD.) 86.12p -1.76% WPP (WPP) 415.30p -1.47% Melrose Industries (MRO) 526.60p -1.39% Shell (SHEL) 2,636.50p -1.33% Antofagasta (ANTO) 1,863.50p -1.27% BP (BP.) 397.20p -1.21% DCC (CDI) (DCC) 4,682.00p -1.10% Bunzl (BNZL) 2,276.00p -1.04% Anglo American (AAL) 2,235.00p -1.02%

FTSE 250 - Risers

QinetiQ Group (QQ.) 508.50p 4.07% Just Group (JUST) 128.60p 3.20% Hochschild Mining (HOC) 288.60p 2.85% HICL Infrastructure (HICL) 123.20p 2.67% Baltic Classifieds Group (BCG) 369.00p 2.62% Oxford Nanopore Technologies (ONT) 152.50p 2.42% Indivior (INDV) 1,167.00p 2.19% Elementis (ELM) 170.40p 2.04% Wizz Air Holdings (WIZZ) 1,052.00p 1.94% Diversified Energy Company (DEC) 1,111.00p 1.93%

FTSE 250 - Fallers

PayPoint (PAY) 780.00p -5.34% Auction Technology Group (ATG) 470.50p -4.95% Bytes Technology Group (BYIT) 320.80p -2.43% Watches of Switzerland Group (WOSG) 355.20p -2.31% RHI Magnesita N.V. (DI) (RHIM) 2,990.00p -2.29% Future (FUTR) 721.00p -1.97% Mitchells & Butlers (MAB) 282.50p -1.22% Bridgepoint Group (Reg S) (BPT) 336.00p -1.18% Ithaca Energy (ITH) 166.00p -1.07% Frasers Group (FRAS) 649.00p -1.07%