FTSE 100 Declines Amid Political Uncertainty and Weak US Data
The FTSE 100 index closed down 32.39 points, or 0.3%, at 10,353.84 on Tuesday, as political tensions in the UK and disappointing retail figures from the United States weighed on investor sentiment. In contrast, the FTSE 250 gained 129.27 points, or 0.6%, to 23,469.30, while the AIM all-share index fell 1.65 points, or 0.2%, to 815.39.
Starmer Defies Resignation Calls Amid Labour Party Speculation
Prime Minister Sir Keir Starmer faced significant pressure to step down after appointing Peter Mandelson as US ambassador, despite Mandelson's known links to convicted sex offender Jeffrey Epstein. Scottish Labour leader Anas Sarwar publicly demanded Starmer's resignation on Monday, citing concerns over judgment and integrity. However, Starmer told a meeting of government ministers that his administration remained "strong and united," vowing not to leave office just 19 months into his five-year term.
Analysts noted the precarious nature of Starmer's position. Michael Pfister, an analyst at Commerzbank, commented, "The truth is that, at the moment, no potential successor is willing to step forward. Local elections are approaching in the spring, and there are fears that the Labour Party will suffer significant losses. It is questionable whether any potential successor would dare to come forward before then."
Corporate Highlights: Coca-Cola HBC and BP in Focus
Coca-Cola HBC emerged as a standout performer, rising 4.7% to become the second-highest UK blue-chip stock. The Zug, Switzerland-based soft drinks bottler reported a net profit of 940.4 million euros (£818.91 million) for 2025, marking a 15% increase from 820.6 million euros (£714.54 million) in 2024. Net sales revenue climbed to 11.60 billion euros (£10.10 billion), up from 10.75 billion euros (£9.36 billion), driven by organic revenue growth of 8.1%. The company proposed a dividend of 1.20 euros (£1.04), a 17% rise from the previous year, and guided for 2026 organic Ebit growth of 7% to 10%, with organic revenue expected to increase 6% to 7%.
In contrast, BP shares fell 3.2% after the London-based oil major announced plans to reduce capital expenditure in 2026, cut operating costs, and pursue its $20 billion (£14.63 billion) disposal programme. Additionally, BP is suspending its share buyback programme, stating that excess cash will be used to reduce debt, aiming to create a "strong platform" for future investments in oil and gas opportunities.
US Markets and Economic Indicators
Stocks in New York showed mixed performance, with the Dow Jones Industrial Average up 0.3%, the S&P 500 index up 0.1%, and the Nasdaq Composite marginally higher. However, tech giants Apple and Alphabet faced declines, with Apple down 0.1% and Alphabet Class A shares losing 1.9%. This followed commitments secured by the UK Competition and Markets Authority from Apple and Google to improve fairness in app store processes, ensuring reviews are conducted in a fair, objective, and transparent manner.
Economic data from the US contributed to market volatility. The US Census Bureau reported that advance estimates of retail and food services sales for December were virtually flat at $735.0 billion (£537.88 billion), compared to $735.1 billion (£537.95 billion) in November, missing the expected monthly growth of 0.4%. Import prices edged up 0.1% monthly in December, below the expected 0.2%, while export prices advanced 0.3%, slightly ahead of expectations. ADP Research indicated that US private employers added an average of 6,500 jobs per week for the four weeks ending January 24, up from 5,000 in the previous period.
Yields on US Treasuries narrowed, with the 10-year Treasury quoted at 4.14% and the 30-year at 4.78%, reflecting investor caution amid the economic data.
Global Equities and Currency Movements
In European equities, the CAC 40 in Paris closed up 0.1%, while the DAX 40 in Frankfurt ended down 0.1%. Currency markets saw the pound strengthen to $1.3661 at the London close, up from $1.3612 on Monday. The euro rose to $1.1901 from $1.1814, while the dollar weakened against the yen, trading at 154.23 yen compared to 157.04 yen previously.
Commodity prices were mixed, with Brent oil quoted at $68.82 per barrel, slightly down from $68.85, and gold falling to $5,011.70 (£3,668.49) an ounce from $5,068.99 (£3,710.63).
Top Performers and Fallers on the FTSE 100
The biggest risers on the FTSE 100 included Croda International, up 275.0p at 3,201.0p; Coca-Cola HBC, up 200.0p at 4,478.0p; Burberry, up 50.0p at 1,225.5; Berkeley Group, up 160.0p at 4,272.0p; and Barratt Redrow, up 13.7p at 389.1p. Conversely, the biggest fallers were Standard Chartered, down 109.0p at 1,790.0p; Babcock International, down 65.0p at 1,364.0p; Antofagasta, down 17.0p at 3,648.0p; St James’s Place, down 53.0p at 1,449.0p; and Hiscox, down 50.5p at 1,453.4p.
Looking Ahead
Wednesday's economic calendar features Chinese consumer and producer inflation data, along with US nonfarm payrolls figures. In the UK corporate sphere, third-quarter results from James Hardie Industries and half-year results from Renishaw and Barratt Redrow are anticipated, which could provide further direction for markets.
