Proactive Investors -
- FTSE 100 down 17 points
- Trump doubles down on Tariff plan
- Shop price declines slow
12.42pm: Melrose holds top spot but retailers decline as index looks to claw back
The FTSE 100 moved away from the day’s low of 8,248 into the afternoon to sit 17 points lower at 8,274.
Retailers were among those facing declines, with Marks and Spencer Group PLC (LSE:LON:MKS), B&Q owner Kingfisher PLC (LSE:LON:KGF) and B&M European Value Retail SA (LSE:BME) all in the day’s losers.
A Confederation of British Industry (CBI) survey earlier on had shown sentiment across the sector at its lowest in two years and that retailers were expecting soft Christmas trading.
“The last time retailers felt this gloomy was back in November 2022, at the peak of the inflation shock,” CBI economist Ben Jones said.
“The stark rise in employers’ national insurance next year will hit retailers hard. And the planned increase in business rates for higher-value properties will add significant operational costs for distribution centres.”
Melrose continued to lead risers on the FTSE 100 in the meantime, following a share price target hike by JP Morgan analysts.
The aero industry was “highly attractive” but also “challenging to understand,” JPM said in a note, leaving instances of sector companies' “intrinsic value” being overlooked.
“In recent years this has been the case with Rolls-Royce (LON:RR), MTU Aero Engines and General Electric (NYSE:GE),” analysts added, “today we think that Melrose is significantly undervalued”.
12.06pm: Lower UK prices possible on back of Trump tariffs - AO World boss
AO World PLC (LSE:LON:AO.) boss John Roberts has signalled Donald Trump’s pledges for tariffs on Chinese goods could feed through to lower prices in the UK.
“Fundamentally if less product is being made in China and shipped to the US then they will want to find another home for that output which might reduce prices for us,” the electricals retailer’s head said following results on Tuesday.
He warned the threats from Trump, made on his Truth Social platform on Monday, were more likely a bid to lay the ground for negotiation though.
“We are a long way from it happening and tariffs biting and the follow through so I personally wouldn’t read too much into [it],” he said.
11.54am: Wall Street set for cautious start
Wall Street appeared on course to edge ever so slightly higher on Tuesday in a cautious start after president-elect Trump doubled down on plans for sweeping tariffs once in office.
Futures had the Nasdaq, S&P 500 and Dow Jones all 0.03% higher ahead of Tuesday’s opening bell.
Trump on Monday evening pledged to bring in 25% tariffs on “all goods” from Canada and Mexico, alongside 10% for those from China, in a post on his Truth Social Platform.
The comments rippled across global markets, sending shares down in the likes of Europe and the US dollar up 0.76% against the Canadian dollar and 1.18% versus the Mexican peso.
“Trump’s tariff talk is a reminder that his posts on social media can be market-moving events, even if his assertions never see the light of day,” XTB analyst Kathleen Brooks said.
Aside from Trump, HP Inc (NYSE:NYSE:HPQ) and CrowdStrike Corp’s earnings were in focus, alongside a string of macroeconomic data, including Federal Open Market Committee minutes.
“The market is not fully convinced a rate cut is coming,” Brooks said, highlighting a 56% chance of a reduction in December’s meeting being priced in by.
“Today’s minutes should add some clarity to the situation. If they signal that a rate cut is likely, it could be a much-needed catalyst to a recovery in market sentiment.”
11.20am: Trump Mexico and Canada tariff pledges hit tequila maker Diageo (LON:DGE)
Diageo PLC (LSE:DGE) was among those hit in the wake of Donald Trump’s latest pledge to introduce sweeping tariffs on goods from Mexico and Canada.
Shares in the Guiness maker, which distils Don Julio tequila in Mexico and operates sites across the country, fell as much as 3.5% on Tuesday morning.
President-elect Trump on Monday vowed to bring in 25% tariffs on goods from Mexico and Canada come his first day in office in January.
XTB analyst Kathleen Brooks noted Diageo’s drop came given it was a “large exporter to the US”.
“Big overseas earners” JD Sports Fashion PLC (LSE:LON:JD.) and Shell PLC (LON:SHEL) also dropped 2.6% and 0.5% respectively, AJ Bell (LON:AJBA) analyst Dan Coatsworth pointed out, while carmaker Volkswagen (ETR:VOWG_p) Group came under pressure too as fears grew of the tariffs stretching to goods from elsewhere.
10.48am: Compass Group (LON:CPG) eyes ‘opportunities’ from Budget
Compass Group PLC (LSE:CPG) boss Dominic Blakemore has highlighted the “opportunity” presented by an increase in employer national insurance following last month’s Budget.
Following results on Tuesday, the catering giant’s head took a different view of the Budget, which has been criticised by UK firms and prompted warnings of price hikes and failures.
The “cost and complexity” of higher taxes will likely pressure firms and increase demand for outsourcing, he told investors.
“The NIC rate increase increases cost for everyone. We see an opportunity in first-time outsourcing.”
Shares climbed 1.9% on Monday.
10.06am: Gold tumbles as dollar gains on Trump tariff promises
Gold remained under pressure on Tuesday morning as the dollar spiked on the back of Donald Trump’s latest pledge to introduce tariffs upon taking office.
Spot gold was trading at US$2,625 an ounce come mid-morning, having fallen 1.86% for the day and to its lowest price for a week.
The dollar gained against foreign currencies in the meantime, climbing against both the euro and the pound.
President-elect Trump on Monday unveiled plans to set 25% tariffs on goods from both Canada and Mexico come his first day in office in January.
Pledging the move through a post on his Truth Social platform, he also signalled 10% tariffs would be slapped on goods from China.
“This was Trump’s most direct assertion about his tariffs plan since winning the election. It suggests that China, Canada and Mexico are in his sights,” XTB analyst Kathleen Brooks said.
“The omission of Europe from his attacks may suggest that Europe is not a top priority, however, it is early days, and there are plenty of opportunities for Trump to direct his attention to Europe down the line.”
9.38am: Melrose shines as tariff fears weigh elsewhere
Melrose Industries (LON:MRON) PLC (LSE:MRO, OTC:MLSPF) shares surged on Tuesday morning, placing it as an outlier on London’s blue-chip index.
A bullish stance from JPMorgan (NYSE:JPM) analysts saw it placed it on ‘positive catalyst watch’ ahead of results next March and get a share price target upgrade from 650p to 850p.
Shares in the aerospace manufacturer jumped 8% to 569.6p on Tuesday as a result, leaving as a standout as peers came under pressure from Trump’s tariff plan.
SPI partner Stephen Innes noted Trump’s promise, to introduce tariffs of 25% on Canada and Mexico on his first day as president, had “dramatically escalated tensions”.
The “bold declaration” shattered “lingering hopes” of an “era of moderation” under new Treasury Secretary Scott Bessent, he said.
“That Europe was not mentioned in Trump’s first tariff post could perhaps be welcome news on the continent,” ING global markets head Chris Turner said.
“Yet local policymakers will remain fearful that it will just be a matter of time before Trump turns his attention to the European auto sector or tariffs more broadly.”
European markets dropped across the board as a result, with the FTSE 100 off 35 points at 8,256.
9.14am: Shop price inflation expected ahead
A trend of deflation across UK shops could be coming to an end after price declines slowed this month, British Retail Consortium (BRC) has warned.
Shop prices fell by 0.6% in November, against October’s 0.8% drop, according to figures on Friday.
This marked the first time in almost a year and a half that shop price inflation increased month on month.
“With significant price pressures on the horizon, November’s figures may signal the end of falling inflation,” BRC chief executive Helen Dickinson commented.
Non-food product prices declined by 1.8% over the month, though this was slower than the 2.1% drop seen in October, while food inflation slowed to 1.8% from 1.9%.
Dickinson warned the industry faced a £7 billion uplift in costs on the back of last month’s Budget employer national insurance contribution hike and higher minimum wages.
“Retail already operates on slim margins, so these new costs will inevitably lead to higher prices,” she said... Read more
8.50am: Stocks drop as Trump doubles down on tariff plan
Renewed commitments to introduce sweeping tariffs by president-elect Donald Trump weighed on stocks into Tuesday morning.
Trump on Monday evening said on his Truth Social platform that he would “sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous open borders” upon taking office in January.
Commodities faced a blow on the post, sending the likes of miners down early on, while the pound also dropped 0.19% against the dollar to US$1.2544.
“It seems that Trump is seeking to assert his authority following his nomination of [Scott] Bessent as Treasury Secretary, a decision that markets anticipated would moderate Trump's policies,” Tickmill Group partner Patrick Munnelly commented.
“Trump expressed his affection for the term ‘tariff’ only last month; therefore, his recent remarks should not have been unexpected, although their timing was.”
The comments also weighed on Asian markets, including those in China for which tariffs are also expected to be introduced.
Back in London, the FTSE 100 shed 37 points to sit at 8,254.
8.40am: AO World bumps up guidance
AO World PLC (LSE:AO.) has lifted its profit guidance for the year after an improved first half performance, despite the impact of unseasonably wet weather.
Revenue increased 6% to £512 million during the six months to September, the electricals retailer reported on Tuesday, pushing operating profit up 11% to £16 million.
On an adjusted basis, operating profit surged 30% to £17 million, prompting AO World to hike full-year guidance for the figure to between £39 million and £44 million, against £36 million to £41 million previously.
“We've had a Morecambe and Wise (LON:WISEa) summer sales period; all the right volumes just not in the right categories,” chief executive John Roberts noted.
“The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned”... Read more
8.12am: FTSE 100 opens on the back foot
London’s blue chips dropped as trading got underway on Tuesday, sending the FTSE 100 down 25 points to 8,266.
Compass led fallers early on, despite hiking its dividend on improved profit over the year.
Panmure Liberum noted the results, which showed operating profit up 16.4% at almost US$3 billion, were “in line” with expectations, alongside guidance for high single-digit underlying operating profit growth in 2025.
Diageo PLC (LSE:DGE) was also among early fallers, alongside Anglo American PLC (LSE:LON:AAL), Antofagasta PLC (LSE:LON:ANTO) and NatWest Group PLC (LSE:LON:NWG).
8.03am: Compass lifts dividend as profit climbs
Compass Group PLC (LSE:CPG) has hiked its dividend after a surge in profit over the course of the year.
Revenue jumped 10.6% to US$42.2 billion (£33.6 billion), aiding a 16.4% increase in operating profit to just under US$3.0 billion, the food services firm said on Tuesday.
A final dividend of 39.1 cents was declared on the back of the results, taking the total for the year to 59.8 cents and up 13.7% on 2023.
Revenue in North America ticked up 10.9% to US$28.6 and by 15.0% across Europe to US$9.9 billion, but fell elsewhere by 3.7% to US$3.7 billion... Read more
7.42am: Halfords warns of Budget hit as profit drops
Halfords Group PLC (LSE:LON:HFD) has warned of a £23 million surge in costs following last month’s Budget and unveiled a drop in profit for the first half.
Revenue dipped by 1.0% to £864.8 million during the six months to September, or by 0.1% on a like-for-like basis, while reported pre-tax profit fell 23.3% to £17.8 million.
Higher employer national insurance and minimum wages were set to fuel costs next year, it said, meaning inflation inflation “may” be passed through on the company’s managed services.
“The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers,” chief executive Graham Stapleton commented.
“While we will work hard to mitigate these costs, we urge the government to consider alternative ways of supporting businesses like ours.” as a result, Halfords warned.
Uncertainty around the Budget had also caused volatile trading in recent months and left doubt over the latter half of the year, the company said... Read more
7.12am: FTSE 100 set to backtrack
Futures had the FTSE 100 falling back 44 points to 8,272 on Tuesday morning in a reverse of Monday’s 29-point gain.
JD Sports Fashion PLC (LSE:JD.) had led the index higher on Monday, followed by the likes of Entain PLC (LSE:LON:ENT) and airlines as oil prices receded.
Oil remained downtrodden into Tuesday, with benchmark Brent crude trading at US$73.21 a barrel and down from as high as US$74.99 the day before.
Overnight, Asian markets dipped into the red, led by a 0.9% drop for Japan’s Nikkei.
5.00am: Compass amon a string of firms to report
Tuesday brings a string of updates from London-listed companies, before HP and Crowdstrike (NASDAQ:CRWD)'s results from across the Atlantic.
Compass should be in line to exceed expectations, analysts believe... Read more
Announcements due:
Trading updates: Intertek Group PLC (LSE:LON:ITRK), Safestore Holdings (LSE:SAFE) PLC, Seraphim Space Investment Trust, Topps Tiles PLC (LSE:LON:TPT)
Interims: Accsys Technologies (AIM:AXS) PLC, AO World PLC (LSE:AO.), Augmentum Fintech PLC (LSE:AUGM), Brickability Group PLC (AIM:BRCK), Caledonia Investments (LSE:LON:CLDN), Cranswick PLC (LSE:LON:CWK), FD Technologies, Halfords PLC, Helical (LSE:HLCL (LON:HLCL)) PLC, IG Design Group PLC (LON:IGRI) (LSE:IGR), Intercede Group (AIM:IGP) PLC, Kinovo PLC (AIM:KINO, OTC:BILBF), LondonMetric (LON:LMPL) Property PLC (LSE:LMP), Mercia Asset Management (LON:MERCM) PLC (AIM:MERC), Schroder Real Estate Investment Trust (LSE:SREI) Ltd, Sosandar (AIM:SOS) PLC, Supreme PLC (AIM:SUP), Telecom Plus PLC (LSE:LON:TEP), Vp PLC
Finals: Compass Group PLC (LSE:CPG), Essensys, Renew Holdings (AIM:RNWH)
US earnings: CrowdStrike Holdings Inc (NASDAQ:CRWD), HP Inc (NYSE:HPQ)
AGMs: Aura Energy (LON:AURA) Limited, CleanTech Lithium PLC (AIM:CTL, OTCQX:CTLHF), Seraphim Space Investment Trust PLC (LSE:SSIT), Tlou Energy Ltd (AIM:TLOU, ASX:TOU, BSE:TLOU), Tungsten West PLC (LON:TUNT) (AIM:TUN, OTC:TNGWF)
Economic announcements: CBI Distributive Trades (UK), Consumer Confidence (US), New Homes Sales (US), Fed Minutes (US)