The FTSE 100 made steady progress on Tuesday, with events in the Middle East continuing to largely dictate market sentiment. The blue-chip index closed up 34.56 points, or 0.3%, at 10,373.51, while the FTSE 250 ended 132.58 points higher, up 0.6%, at 23,378.36. The AIM All-Share index slipped by 0.92 of a point, or 0.1%, to 818.32.
Middle East Developments Influence Markets
Modest gains for London’s leading shares came after US President Donald Trump insisted that peace talks with Iran were advancing rapidly and that Israel and Hezbollah had agreed to a ceasefire, although Israeli strikes resumed on Tuesday. Susannah Streeter, chief investment strategist at Wealth Club, commented: “There is no concrete progress in Middle East negotiations to hang a hat on, but investors appear broadly optimistic that a longer-term resolution will be reached.”
Oil Prices Remain Subdued
David Morrison at Trade Nation noted that despite oil market turmoil, “prices remained near the bottom of their recent range,” well below the $100 per barrel level seen a few weeks ago. Brent crude for August delivery traded lower at $94.68 a barrel on Tuesday, down from $97.22 at the time of the London equities close on Monday.
Global Equity Markets Performance
In European equity markets, the CAC 40 in Paris ended up 0.8%, and the DAX 40 in Frankfurt closed 0.5% higher. In New York, the Dow Jones Industrial Average rose 0.3%, the S&P 500 gained 0.2%, and the Nasdaq Composite firmed 0.3%. US markets had posted record highs on Monday, driven by renewed enthusiasm for artificial intelligence (AI).
AI Sector Developments
Nvidia shares opened higher on Tuesday after jumping more than 6% on Monday, following the unveiling of a powerful laptop chip for Windows machines. Meanwhile, Google parent Alphabet announced plans to raise up to $80 billion (£59 billion) in stock to fund a major expansion of its AI infrastructure, with Warren Buffett’s Berkshire Hathaway committing $10 billion (£7.4 billion).
Anthropic, the maker of the Claude chatbot, revealed it had filed confidentially for an initial public offering that could value the AI group at nearly one trillion dollars (£743 billion). Wealth Club’s Ms Streeter noted that Anthropic’s news comes “hot on the heels” of SpaceX’s filing, adding “there are expectations that OpenAI will also go public pretty soon.”
These listings are set to intensify excitement around AI, but they may also fuel concerns that parts of the market could be entering bubble territory, Ms Streeter warned. “High-profile IPOs can still become turning points for market sentiment if valuations appear too detached from fundamentals. Any disappointment could trigger a wider reassessment across tech stocks, which have soared in value,” she added.
Currency and Bond Markets
The pound traded at $1.3475 on Tuesday afternoon, up from $1.3447 on Monday. Against the euro, sterling firmed to €1.1578 from €1.1570. The yield on the US 10-year Treasury trimmed to 4.45% on Tuesday from 4.51% on Monday, while the yield on the 30-year Treasury narrowed to 4.96% from 5.01%.
Eurozone Inflation Accelerates
Figures showed inflation in the eurozone speeding up, putting pressure on the European Central Bank to hike interest rates next week. According to a flash reading from Eurostat, the harmonised index of consumer prices rose 3.2% annually in May, accelerating from the 3.0% rise in April, in line with consensus. Core HICP, which excludes food, energy, alcohol, and tobacco, accelerated to 2.5% in May from 2.2% in April, ahead of the consensus forecast of 2.4%, hitting its highest level since April last year.
“A week ahead of the next ECB meeting, this is the expected uptick in inflation that will motivate the central bank to decide on an ‘insurance’ hike,” suggested Carsten Brzeski, ING Global Head of Macro. Iain Simmons at Oxford Economics said that while small, the acceleration in inflation will “remain uncomfortable for the ECB and in our view confirms that the central bank will hike rates in June.”
The euro traded higher against the greenback, at $1.1638 on Tuesday versus $1.1624 on Monday. Against the yen, the dollar was trading at ¥159.89, higher than ¥159.64.
Commodities and Sector Movers
Gold traded at $4,503.10 an ounce on Tuesday, up from $4,472.82 on Monday. On the FTSE 100, miners Antofagasta, Anglo American, and Glencore led the gainers, rising 6.5%, 4.1%, and 4.6% respectively, as metals prices climbed.
However, British American Tobacco fell 2.5% despite reiterating full-year guidance for group revenue growth of between 3% and 5% for 2026. For the global cigarette industry, BAT expects volumes to decline by 2.5% in 2026, worse than the previously forecast 2%. Citigroup analyst Simon Hales said the combination of lower global cigarette volume estimates, a slower-than-expected first-half recovery in Asia-Pacific, Middle East, and Africa, an 80 basis points share loss in US combustibles, and Philip Morris’s launch of ZYN Ultra nicotine pouches in the US is likely to be seen as negative for the firm.
FTSE 250 Movers
On the FTSE 250, Elementis rose 2.9% after pledging a €30 million share buyback using proceeds from the sale of its pharmaceutical manufacturing business. GB Group fell 16% after announcing £6 million in investment, which it said will impact near-term margins, with benefits expected in later years. Analysts at Jefferies commented: “This will impact short-term numbers, which may annoy some. However, in the context of the valuation, we think management should be backed for making positive strategic moves. We continue to believe the valuation overlooks today’s growth, let alone future growth potential.”
FTSE 100 Risers and Fallers
The biggest risers on the FTSE 100 were Antofagasta, up 268.00p at 4,408.00p; Glencore, up 26.90p at 615.00p; Anglo American, up 168.00p at 4,225.00p; Barclays, up 15.40p at 470.20p; and Intercontinental Hotels Group, up 5.05p at 158.20p. The biggest fallers were Airtel Africa, down 18.40p at 334.60p; Sage Group, down 36.80p at 870.80p; Endeavour Mining, down 167.00p at 4,250.00p; Experian, down 88.00p at 2,588.00p; and London Stock Exchange Group, down 262.00p at 8,924.00p.
Outlook for Wednesday
Wednesday’s global economic calendar includes Australian GDP data overnight, a slew of composite PMI readings, ADP payroll data, and the Federal Reserve’s Beige Book. The local corporate calendar features full-year results from DiscoverIE Group and third-quarter results from Seraphim Space Investment Trust.
Contributed by Alliance News
