The FTSE 100 closed higher on Tuesday, climbing 31.84 points (0.3%) to 10,886.16, as oil prices cooled and investors positioned ahead of Wednesday's earnings from Nvidia and US inflation data. The FTSE 250 rose 138.57 points (0.6%) to 24,856.05, while the AIM All-Share added 1.44 points (0.2%) to 815.48.
Melrose Leads Gains After Investigation Update
Melrose took the top spot on the FTSE 100, soaring 10% after announcing it will not face a criminal investigation relating to its Garden Grove site in California. The Birmingham-based aerospace and defence company also said it aims to resume manufacturing at the site by late September, following an overheating chemical tank that forced a mass evacuation in May.
A claims programme will be launched to provide up to 100 million dollars for residents and businesses seeking damages, the FTSE 100 listing said. Citigroup analyst Charles Armitage noted that while some civil fines are still possible, "we believe this largely quantifies the financial impact of the incident and materially reduces the risk for investors."
US and European Markets Mixed
Across the Atlantic, US stocks were higher, with the Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.4%. Nvidia rose 1.1% ahead of its earnings release after the Wall Street close on Wednesday.
Kathleen Brooks, research director at XTB, said the market is starting "to price in the effects of a potential monster earnings report that restores faith in the AI trade." She added that "the most actively traded stocks in the US right now are all the major AI names, including Nvidia, Tesla, Micron and SanDisk," which suggests Nvidia's results will be a key driver of price action and potential volatility later this week.
In Europe, the CAC 40 in Paris closed down 0.2%, but the DAX 40 in Frankfurt rose 0.7% after the ifo Institute reported the German business climate improved more than expected in August. The ifo business climate index climbed to 88.8 points from 86.7 points in July, beating the market consensus of 87.2 points. JPMorgan analyst Greg Fuzesi noted that "the larger-than-expected jump in today's ifo, driven by improved current conditions and expectations, reinforces the sense of cyclical lift and comes despite the renewed increases in energy prices."
Currency and Oil Movements
The pound traded at 1.3632 dollars on Tuesday afternoon, down from 1.3639 dollars at Monday's equities close, and eased to 1.1683 euros from 1.1689 euros. The euro stood at 1.1671 dollars against 1.1669 dollars, while the dollar rose to 159.25 yen from 159.13 yen. The yield on the US 10-year Treasury narrowed to 4.65% from 4.70%, and the 30-year yield fell to 5.19% from 5.23%.
Lower oil prices provided support to markets, with Brent crude for October delivery trading at 89.31 dollars a barrel, down from 92.74 dollars on Monday. David Morrison, senior market analyst at Trade Nation, pointed to speculation of a "sudden, and unexpected, breakthrough in US-Iranian negotiations" as the reason behind the price falls, citing reports that Pakistan's Chief of Army Staff was returning to Tehran with an offer to halt the US blockade and lift sanctions. "Early days, and investors haven't got too carried away, but it's a good piece of news," he noted.
Next and Vistry Rise on Upgrades and Funding
Back in London, Next rose 2.4% after Citigroup upgraded the stock to "buy" from "neutral." Citi analyst Monique Pollard believes Next should command a higher valuation given its rapid international growth, noting the segment has grown at a 20% plus five-year sales compound annual growth rate through 2025 and now makes up more than 20% of product revenue.
On the FTSE 250, Vistry surged 16% after securing a significant direct grant award as part of the UK Government's £39 billion social and affordable homes programme. The Kent-based housebuilder said the initial funding of £350 million, the largest award possible in the first allocation, is significantly in excess of the first award received under the previous programme. Russ Mould, investment director at AJ Bell, called the award a "major fillip" for chief executive Adam Daniels ahead of a strategy day at the end of next month, noting Vistry requires a big second-half improvement to hit its full-year profit targets.
Jupiter Fund Management rose 4.3% as Berenberg initiated coverage with a "buy" rating and a price target of 187p. Smarter Web saw its shares slump 8.5% after announcing that Jesse Myers, head of bitcoin strategy, is leaving the company effective from September 1, though its bitcoin treasury policy will remain unchanged.
Gold traded at 4,642.09 dollars an ounce on Tuesday, down from 4,670.28 dollars on Monday. The biggest risers on the FTSE 100 were Melrose Industries, AstraZeneca, Next, Polar Capital Technology Trust, and International Consolidated Airlines, while the biggest fallers were Standard Chartered, Diageo, Compass, British American Tobacco, and Smith & Nephew.
Wednesday's global economic calendar includes an inflation print in Australia overnight and US personal consumption expenditures and GDP data, while the UK corporate calendar has half-year results from Prudential and a trading statement from lender S&U.
