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- FTSE 100 flies 88 points higher to 7,806
- Trump agreed to extend EU talks until 9 July
- UK shop price inflation broadly flat in May
8.56am: UK retail prices mixed
UK retail prices were broadly flat this past month, according to the monthly shop price index from the British Retail Consortuum and NIQ.
Non-food deflation deepened to 1.5% in May from 1.4% in April, as prices for fashion and furniture saw retailers unwinding heavy promotional activity.
Prices were falling faster for electricals, which the BRC said was due to retailers trying to encourage spending before any potential knock-on impact from US tariffs.
Food inflation increased to 2.8% year on year in May, against growth of 2.6% in April, with beef steaks one of the notable increases as wholesale beef prices increased.
8.34am:
Elementis plc (LSE:ELM) shares are up just over 10%, topping the FTSE 350 leaderboard, after its talc deal announcement.
Another mover is React Group PLC (LSE:REAT), which has tumbled almost 22% after the cleaning services company warned that full-year results are now expected to fall below market expectations.
It posted double-digit revenue and profit growth for the first half, but this was thanks to a recent acquisition.
Otherwise, the company cited reasons for the downgrade as being “prevailing sector specific and global economic pressures extending business decision cycles, particularly for higher value contracts”.
8.12am: FTSE 100 leaps at the open, aerospace firms fly higher
The FTSE 100 has leapt to a 72-point gain in initial trading to 8,790.67.
Playing catch-up with European indices solid gains yesterday, the London benchmark is being led by finance and aerospace names, including Melrose Industries, BAE Systems, IAG, Rolls-Royce, St James’s Place, Intermediate Capital and Schroders.
Precious metals miners are the laggards, though the gold price has slipped $40 from Friday.
7.59am: Alphawave still in takeover talks
And talks continue between Alphawave IP Group PLC (LSE:AWE) and Qualcomm Inc (NASDAQ:QCOM, ETR:QCI).
Nasdaq 100-listed Qualcom said at the start of April that it was considering making an offer for the Canadian maker of high-speed microchips.
Today, having already extended the ‘put up or shut up’ deadline to 12 May and 27 May, says the two companies “remain engaged in discussions in respect of a possible offer” and so the date has been set for 2 June now.
7.52am: One in for Saatchi and one out for Elementis
A couple of deals now.
M&C Saatchi PLC (AIM:SAA) has struck a deal to buy a UAE-based sports agency that it says will “bolt on” to its existing business in Dubai and Abu Dhabi.
Dune 23 Sport & Entertainment currently has a client roster including Emirates Dubai 7s rugby festival, Mubadala Abu Dhabi Open women’s tennis tournament, Chicago Bulls, LIWA Festival, Zayed Sports City, All Things Live, Dubai Watch Week, Longines Global Champions Tour, Nada Dairy, BRED by Hypebeast and SailGP.
“Dune 23 brings specialist expertise, a proven track record, and a team uniquely attuned to creating lasting impact through passion and fandom,” the UK ad agency says, with its expansion into the Middle East “driven by increasing demand from clients and growth opportunities”.
And Elementis plc (LSE:ELM) has completed the sale of its talc business to IMI Fabi for net cash proceeds after transaction costs of roughly $55 million (almost £41 million).
The chemicals group launched a strategic review of the business last August and the board is said to see the sale as representing “the best outcome for all stakeholders”.
As well as representing another “milestone” in the group’s refocusing as a specialist provider of additives for the high-margin coatings and personal care markets, the disposal also improves its profit margin.
The plan is to return $50 million to shareholders by way of a share buyback.
7.31am: Whitbread chair steps down after seven years
Whitbread PLC (LSE:WTB) chairman Adam Crozier, a well-known figure in the City and around the UK from former roles as boss of ITV, Royal Mail and the Football Association, is stepping down from the hotel company.
He will leave at the start of September after seven years in the role, with former Capgemini boss and current Severn Trent chair Christine Hodgson taking his seat.
Crozier joined Whitbread in 2017 and oversaw the sale of its Costa Coffee chain for £3.9 billion to become wholly focused on its budget hotels and gastropubs.
7.24am: Market showing evidence of ‘fear fatigue’
This week is half-term in the UK, so activity could be a bit slower, says Jim Reid at Deutsche Bank.
This “could have been a problem if we were still facing the June 1st 50% tariff deadline for the EU,” he adds, “but yet again we saw a deadline delay over the weekend back to the original July 9th date after a positive call between Trump and EC President von der Leyen.”
This saw the Stoxx 600 jump 1% to make up for Friday’s 0.9% fall, but Reid says the size of Friday’s fall “showed that markets are getting more accustomed to Trump’s threats and now partly assume the full threat won’t immediately materialise”.
“There is certainly fear fatigue.”
He notes that the dollar hasn’t rallied since the news on Friday and has instead edged lower.
“Investors are seemingly of the view that continued aggressive tariff headlines chip away at investors desire to hold US assets,” he adds, noting that 10yr European bond markets rallied a couple of basis points yesterday while 30yr yields were 2-5bps lower.
7.15am: FTSE 100 called slightly higher
The FTSE 100 has been called higher as it begins its week on Tuesday morning after a long weekend, potentially playing catch-up with gains seen in Europe the previous day.
On the futures market the London index is anticipating a gain of six points, having ended last week on a down note following a threat by US President Donald Trump to hit the European Union with a 50% tariff from 1 June.
However, yesterday the White House announced it will delay the introduction of a 50% tariff on all EU imports until July 9 to allow time for trade negotiations.
Following a phone call between Trump and EU Commission President Ursula von der Leyen, who requested more time to facilitate ongoing discussions, the US President said on a social media post that he had “agreed to the extension”.
Yesterday the German DAX and French CAC added 1.7% and 1.2%, while the US indices were on holiday too.
Asian markets are mainly higher this morning, with the Japan’s Nikkei up 0.4% and the Hang Seng up 0.3%, but the Shanghai Composite down 0.2%.
Announcements due on Tuesday 27 May:
Interims: Greencore Group
Overseas earnings: Auto Zone, Soitec, Xiaomi
Economic announcements: BRC Shop Price Index (UK), Business Climate Indicator (EU), Consumer Confidence (EU), Durable Goods Orders (US), House Price Index (US), Consumer Confidence (US)
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