- FTSE 100 rises 9 points to 8,609
- UK and India strike free trade deal
- BP shares rise on reports Shell mulling takeover
- Deliveroo accepts bid from DoorDash
- AB Foods in talks about selling Kingsmill bread business
4.05pm: FTSE heading towards another small gain
The FTSE 100 could make a late dash into positive territory, keeping its winning run going further into record territory, after spending most of the session in negative territory.
That's it from me, but if the London index finishes higher its winning streak will be 16 days in a row, having been on the climb ever since 10 April.
Precious metals miners are top of the risers, with Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) and Fresnillo PLC (LSE:FRES) topping the leaderboard, up 4.9% and 4.3%.
Analysts at Panmure said Endeavour's Q1 numbers last week showed it had a "very good" first quarter operationally, with production ahead of consensus forecasts and free cash flow 53% higher than expected.
The biggest blue-chip faller in London today is Marks and Spencer Group PLC (LSE:MKS), where UBS said earnings "may potentially see circa -3% to -12% downgrades" from the cyber event that has dogged the retailer for over two weeks.
Four key areas of disruption have been identified: lost online Clothing & Home sales, overstocking of seasonal inventory, food supply issues, and lower staff productivity. And this is not assuming any financial liabilities if there turned out to be a leak of consumer data.
Other notable fallers include Anglo American, down 3%, Shell, down 1.7%, and Barclays, down 1%.
3.28pm: Merz wins second vote, economists say govt needs to act fast
Germany has a new Chancellor, with Friedrich Merz winning a second vote.
Deutsche Bank economist and political analyst Marion Muehlberger says: “With the election of Friedrich Merz as Chancellor, the Bundestag has set a decisive course today.
"If the new government now swiftly implements its 100-day program with the urgently needed relief for the German economy, the fact that it took two attempts [for him] to become chancellor will quickly fade into the background."
The loss in the earlier vote today was said to be unprecedented.
Berenberg economist Holger Schmieding said earlier it was a "bad surprise", as he did not get the full support of the parties that have agreed to form a coalition with him as chancellor.
While Merz was still expected to be elected as chancellor at the time, Schmieding said "the unprecedented failure to be elected in the first round would still be a bad start for him. It shows that he cannot fully rely on his two coalition parties. That will sow some doubts about his ability to fully pursue his agenda, damaging his domestic and international authority at least initially."
Indeed, despite the win, the DAX index is still down 0.5%. And elsewhere, France's CAC 40 is down 0.4%, suggesting that while the vote has been turned around markets are still worries - or maybe something else is weighing on stocks.
2.55pm: Wall Street slides at the open
US markets have dived lower at the open, led by Peter Thiel's Palantir, which is down 12.3%.
That is dragging the Nasdaq, which is the biggest faller among the major indices, down 1.3%.
The S&P 500 and the Dow Jones are both down just over 1%, while the small cap Russell 2000 has slipped 0.9% lower.
DoorDash is down 7.3% after reporting disappointing earnings and agreeing the Deliveroo deal.
2.33pm: India deal to benefit aeroplane parts, cosmetics, soft drinks companies
More on the UK-India deal, which will remove tariffs on items such as medical devices, aeroplane parts and electrical machinery, cosmetics, soft drinks, lamb, chocolate and biscuits.
Food products from India, as well as clothing and footwear, will also see tariff cuts. Rice, tea, spices and cotton are are big imports from India currently.
"We are now in a new era for trade and the economy," Keir Starmer said. "Today we have agreed a landmark deal with India — one of the fastest growing economies in the world, which will grow the economy and deliver for British people and business."
2.27pm: UK-India trade deal struck
The UK and India have agreed a "free trade deal", according to Prime Minister Narendra Modi.
He called it "an ambitious and mutually beneficial free trade agreement" that will "catalyse trade, investment, growth, job creation, and innovation in both our economies".
India will cut tariffs on 90% of UK imports, with 85% of those becoming tariff-free within a decade
Downing Street estimates it will increase bilateral trade by £25.5 billion and UK GDP by £4.8 billion.
It is being reported that the UK will not move on its immigration policy - but will allow some leeway for workers from India.
2.02pm: BoE delay
The Bank of England's interest rate announcement on Thursday will be delayed, but just by two minutes.
So, the decision will to be announced at 12.02pm, rather than bang on midday.
The BoE says it is to allow the national two minutes of silence to commemorate the 80th anniversary of VE day.
1.55pm: Logic behind Shell and BP combo
There are some compelling reasons for Shell PLC (LSE:SHEL, NYSE:SHEL) to bid for BP PLC (LSE:BP.), reckons UBS.
UBS boils it down to two simple forces: scale and synergies. A combined Shell and BP would rival ExxonMobil on size, with nearly 5 million barrels of oil equivalent a day, over 90 million tonnes of annual LNG sales, and a vastly expanded retail footprint, especially in the US.
As BP found $4.5 billion in cost savings when it acquired BG Group, UBS thinks a BP tie-up could unlock similar value, especially across overlapping downstream, trading and LNG operations.
However, analysts also see reasons not to bid.
12.25pm: Wall Street heading lower
The FTSE 100 is treading water as we move into the afternoon part of the session, though down just 0.1%, while across in Continental Europe the DAX and CAC are down 0.8% and 0.4%.
US stock futures are also in the red, led by the Nasdaq with a 1% deficit anticipated. S&P 500 futures are down 0.7% and those for the Dow Jones are down 0.5%.
Palantir stock is down 6% premarket after earnings that seemed strong enough after last night's closing bell.
Ford is down 2.5% after withdrawing guidance due to tariff risks and uncertainties.
11.17am: BoE interest rate cut picture could be changing
On the back of the services PMI, the Bank of England might make back-to-back interest rate cuts, says economist Rob Wood at Pantheon Macroeconomics.
"President Trump’s month of tariff hokey cokey, massively stoked uncertainty that has hit UK business sentiment hard," says Wood.
He estimates that the composite PMI is consistent with a first estimate of second-quarter GDP growth between -0.4% to 0.0% quarter-to-quarter.
However, Wood strongly recommends "interpreting the PMI with caution this month", as the PMI survey "picks up sentiment in addition to actual changes in output and overreacts to political events and uncertainty".
So, while there is "no doubt that a cloud of uncertainty has slowed UK growth, but we doubt the UK economy has suddenly dropped into recession".
The services survey's significant rise in output price inflation will give the Bank's monetary policy committee pause, Wood says, adding that there could be a "couple of precautionary rate cuts" while the inflation backdrop is watched.
Matt Swannell, chief economic advisor to the EY ITEM Club, agrees that the survey typically does a better job at capturing fluctuations in business confidence than actual changes in private sector activity.
Still, GDP growth is likely to be slower in the second quarter as the initial effects of tariffs start to be felt, he says.
Despite the significant rise in output price inflation resulting from higher labour costs, a 25bps rate cut at this Thursday’s MPC meeting "remains almost certain".
"Early signs suggest the MPC may be open to adopting a more proactive approach to loosening at subsequent meetings, but the minutes and press conference will provide a better sense of whether that's a realistic possibility."
10.47am: Downbeat tone for markets
European markets are seeing "a downbeat tone", says market analyst Josh Mahony at Scope Markets.
"Coming in the wake of yesterday’s end to the SPX nine-day winning streak, there are concerns that the FTSE 100 will follow suit to halt the longest stretch of daily gains on record," he adds.
While recent better-than-expected US economic data has helped allay some recession fears for the time being and "provides some room for Trump to strike trade deals", the warning from Japan that they may cut back on US treasury purchases in the face of a breakdown in trade relations highlights the risk of a surge in borrowing costs and US debt, says Mahony.
"With the dollar hitting a three-year low, and the 10-year yield largely rangebound, it is gold which has taken the mantle as the haven of choice during this period of global uncertainty.
"Looking ahead, traders remain in wait and see mode ahead of tomorrow’s FOMC announcement, with the surprisingly resilient data seen of late bringing little hope for a rate cut from the Fed."
Mahony adds that perhaps Trump’s saving grace could come in the form of falling energy costs, with WTI crude dropping to the April 2021 levels of $55 yesterday.
"In the absence of OPEC support, oil prices may need to fall further to ultimately balance the market," he adds, noting that on the other side of this coin was US oil producer Diamondback Energy saying the deteriorating economics is leading to restricted investment and a loss of US market share.
10.06am: Analyst views on AB Foods' deal news
The confirmation from AB Foods this morning that it is in discussions with Endless regarding a potential transaction involving Allied Bakeries and Hovis, is far from unexpected, as the group had said in its results last week that it was examining options.
Analyst Clive Black at Shore Capital says this is a rekindling a recurring story of a potential merger between Allied and Hovis, the latter owned by Endless.
It "may create a basis for further rationalisation, concentration of production, and so better margins, albeit what the Competition & Markets Authority (CMA) may make of matters remains to be seen," he says.
"Allied has not only been a perennial challenge for ABF, it has also been a highly costly one, and so a better solution should be welcomed by shareholders."
Anubhav Malhotra at Panmure Liberum says a "potential merger of equals could unlock significant cost efficiencies necessary for the turnaround of both businesses" but agrees that a transaction between the second- and third-largest players in the market "would likely attract regulatory scrutiny".
But he views such a deal as "being in the long-term interests of all stakeholders, as both companies may struggle to remain viable independently".
9.44am: UK services sector slips into negative mood
The UK services sector last month slipped into a negative mood for the first time in a year a half, as Donald Trump's tariffs hit overseas business orders.
S&P Global's purchasing managers' index survey fell to 49.0 for April, down from 52.5 in March, though slightly better than the 48.9 preliminary reading. A PMI below 50 mark indicates a fall in activity.
Adding that to the manufacturing PMI we had last week, the UK composite PMI reading for April was 48.5, improved from 48.2 in the flash reading but down from 51.5 in March.
The services sector survey found that companies experienced a "marginal downturn in business activity" in the past month, thereby ending a 17-month period of expansion, which reflected a downturn in orders, particularly new work from abroad.
"UK service sector output slipped into contraction for the first time in one-and-a-half years as heightened business uncertainty weighed on order books during April," said Tim Moore, economics director at S&P Global Market Intelligence.
"Export conditions were particularly weak, with new business from abroad falling to the greatest extent since February 2021."
9.29am: German politics hits markets
The FTSE has fallen into the red, following Germany's DAX, which has slumped on political news from Berlin.
After starting higher, the German benchmark has dropped 0.9% into the red, with France's CAC following suit and now the London index has joined in.
The news is that Friedrich Merz has fallen short of the majority needed to become Germany's Chancellor in the first round of voting in parliament, by just six votes.
Merz's CDU won Germany's snap legislative elections in February, and last month he agreed a deal to form a coalition to succeed Olaf Scholz as the country's premier.
Reports from the Bundestag suggest the parties will regroup to discuss the next steps. Parliament has 14 days to elect a candidate with an absolute majority, otherwise new national elections will be called.
9.20am: UK car sales down
UK new car registrations for April were down 10.4% year on year, according to new data from the industry, which has again called for more incentives for low-emission vehicles.
Some 120,331 vehicles were registered last month, the Society of Motor Manufacturers & Traders has just revealed, with monthly figures below where they were a year ago for sixth time out of the last seven updates.
Battery electric vehicle (BEV) registrations numbers 24,558, up 8.1% year on year. Plug-in hybrid (PHEV) sales were up 34.1% to 14,073.
BEV sales gathered a 20.4% share of the market, still well below the 28% requirements of the government's Zero Emission Vehicle Mandate.
8.52am: Frasers boosted by Hugo Boss update
Frasers Group PLC (LSE:FRAS) shares are up 1.8% after an update from Hugo Boss that sent shares in the Germany company up 9%.
The fashion label, in which the Sports Direct owner has a 19% stake, reported first-quarter results ahead of expectations and backed its outlook for the year.
With increased global economic uncertainty weighing on the consumer mood around the world, sales were down 2% in the first quarter, which it said would have been worse but for its strategic initiatives and "brand momentum".
Revenues were down 8% in the Asia-Pacific region due to "subdued consumer demand in China", with 1% declines in the Americas and the Europe, Middle East and Africa (EMEA) regions.
Frasers expanded its investment in Hugo Boss last month through the sale of further put options to take its ownership to 13.5 million shares, representing a 19.2% direct stake, having made a £300 million investment last year.
8.13am: FTSE 100 starts higher
The FTSE 100 has started the holiday-shortened week higher, up 27 points to 8,623.5.
Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) is top riser early doors, up 3.7% as gold prices are on the up again, hitting $3,3674 an ounce this morning.
BP PLC (LSE:BP.) is next, up 2.6%, following reports yesterday that Shell is exploring the feasibility of a takeover bid.
8.05am: Buffet bowing out
Another thing that happened yesterday: Warren Buffett, the hugely influential boss of Berkshire Hathaway, announced plans to retire at the end of this year.
Here's our profile of the Sage of Omaha: Buffet, the billionaire investor who stayed home.
8am: What happened on markets yesterday
With Wall Street and European stocks trading yesterday while Brits shivered on the beach, here's an update on what we missed from markets yesterday from market analyst Ipek Ozkardeskaya at Swissquote Bank.
She says the week kicked off on a positive note for German stocks, with defence giant Rheinmetall top riser on the DAX, "while enthusiasm was much less visible in the US markets".
The S&P 500 gapped lower early doors and then spent the session trying to rebound.
"The buying that had been driven by hopes of a turnaround in trade winds over the past nine sessions is gently losing momentum," says Ozkardeskaya.
"Still, there are some minor developments: India is considering zero tariffs on sectors including steel and auto parts, and Trump keeps saying that trade deals will be announced as soon as this week. So, we wait."
The week began with President Trump’s latest threat: 100% tariffs on foreign-made films to save "dying Hollywood", which sent Netflix and Disney lower.
In FX, the US dollar remains softer, she adds, with a rapid selloff against Asian peers particularly in focus over the past two sessions that has "raised concerns about the dollar’s status as a safe haven and reserve currency".
"It’s now said that Asian countries may be rushing to convert their dollar-denominated export revenues into local currencies to avoid holding USD in an increasingly uncertain trade and geopolitical environment."
7.50am: Deliveroo agrees to be taken over by DoorDash
The Deliveroo PLC (LSE:ROO) board has agreed to a £2.9 billion takeover offer from New York-listed peer DoorDash.
DoorDash said in a statement this morning that it made a formal offer of 180p, the same price as the indicative offer it made a week last Friday, which the board of the FTSE 250-listed company has accepted.
Analysts said last week that the price offered by DoorDash was by no means a "knockout" and could attract a rival bid.
7.29am: AB Foods in talks about selling bread division
Primark's parent company Associated British Foods PLC (LSE:ABF) has confirmed that it is in talks about potentially selling its Allied Bakeries business.
The FTSE 100 group made the statement in response to recent media speculation, adding that it is "in discussions" with Endless, the owner of bread brand Kingsmill, about a potential deal.
Allied Bakeries makes breads under brands including Hovis, Allinson's and Sunblest.
AB Foods said in its interim results only last week that it was evaluating strategic options for loss-making Allied Bakeries, which it said faces a "very challenging" market.
7.15am: FTSE 100 called lower after long weekend
The FTSE 100 has been called slightly lower on Tuesday after the long weekend, with Wall Street having finished lower while the City was enjoying the bank holiday and M&A news dominating the early announcements.
London's blue-chip index is anticipated to start 8 points lower, having ended last week at 8,596.35 with a strong 100-point finish.
The tech-heavy Nasdaq led the US declines overnight, down 0.7%, while the S&P 500 fell 0.6% and the Dow Jones 0.2%.
Asian markets are mostly higher this morning, led by a 1% gain for Japan's Nikkei.
Financial diary for Tuesday 6 May
London is expected to ease back into the week after the May bank holiday, with some services sector data and new car sales figures providing some grist to the market's mill.
The US balance of trade should do likewise for Donald Trump's social media account.
Trading updates: International Workplace Group, Kosmos Energy
Finals: Facilities by ADF, Huddled Group
Overseas earnings: Ball Corp (premarket), Advanced Micro Devices, Rivian Automotive (after)
AGMs: 88 Energy, Caledonia Mining Corporation, Plus500, Temple Bar Investment Trust
Economic announcements: PMI Services (UK, US, EU, CHN), New Car Sales (UK), Balance of Trade (US),