- FTSE 100 rises 26 points to 8,787
- Sainsbury's reports strong quarter of sales
- UK energy bills to rise to pay for network improvements
- Expectations remain for BoE rate cut next month after Bailey remarks
- Tesla shares slump as Musk and Trump reignite feud
4.20pm: London stocks finishing on front foot
With a few minutes to go on Tuesday, London stocks were surging at intraday highs, with both the UK's blue-chip and mid-cap indices up 0.3%.
As well as the newspaper report (below) lifting the FTSE 100's largest company, there were also gains for several other names among the top 20 largest stocks.
GSK and Unilever were also up over 1%, while caterer Compass was up 2.3% and drinks maker Diageo has risen 3.6%.
3.42pm: Footsie's biggest company on the move
AstraZeneca shares have jumped on reports that CEO Pascal Soriot wants to move the FTSE 100's largest company to the USA.
The Frenchman is frustrated with restrictions on medicines and pricing under the NHS, the Times is reporting.
He does not like the restrictions imposed by NICE (the National Institute for Health and Care Excellence), which advises the NHS on which treatments, including medicines, are cost-effective and should be funded.
Shares in AZ have jumped 2.6%.
3.11pm: B&M top of the leaderboard
Top riser on the FTSE 350 today is B&M European Value Retail SA (LSE:BME) after analysts at RBC Capital Markets joined those suggesting the discounter could be on track for a turnaround in sales and potential shareholder returns.
Highlighting the mid-cap chain as one of its top picks in the sector, the RBC analysts said like-for-like sales should start to recover from the first quarter, supported by improved weather, easier comparables, and better merchandising.
The bank also pointed to a shift in store manager incentives towards driving sales rather than focusing solely on standards.
With a trading update due on 15 July, the RBC note comes after Citi also recently saw potential for a return to positive LFL growth, with industry till roll data pointing to total sales rising around 9% in the first 11 weeks of the quarter ending on 28 June.
2.42pm: Wall Street mixed at the open
US stocks have opened mostly lower, with the tech-heavy Nasdaq falling the most as Tesla plunges 7.5%.
The Nadaq Composite is down 0.4% and the S&P 500 has retreated 0.2% from its new record high.
The Dow Jones is in just positive territory now, after an initial drop.
Back in London, the FTSE 100 is almost back to flat, with gold and base metal miners, consumer and leisure stocks all higher.
2.05pm: Germany's biggest IPO of the year shelved
German's Brainlab has pressed pause on its IPO just days ahead of first deals, blaming recent stock market volatility.
The Munich-based medical technology firm, which designs imaging software for surgeons, said "an IPO at a later time remains under consideration by Brainlab and the selling shareholders".
It had priced its listing offer at the lower end of its initial range.
First day's dealings had been scheduled for Thursday in Frankfurt.
1.26pm: Invest more, please
Rachel Reeves is going to cut the annual tax-free cash ISA allowance, in order to encourage savers to invest more and boost the stock market, according to reports.
The Chancellor is expected to announce plans to cut the cash ISA allowance below the current £20,000 ceiling in a speech at Mansion House on 15 July, the Financial Times reported.
Officials told the newspaper that Reeves believes that the plan "will create a stream of fresh investment into London-listed companies, boosting the stock market, by encouraging savers to shift from cash to shares".
She has publicly promised not to reduce the overall amount that the public can invest tax-free in ISAs each year.
1pm: Southern Water avoids debt breach
Southern Water has secured up to £.2 billion of investment from its majority owner, Australia's Macquarie, to help it avoid breaching terms of its regulatory licence over debt levels.
A consortium led by Macquarie has committed to invest £655 million, with another £245 million promised by the end of the year from existing shareholders and new investors.
Southern could receive another £300m depending on the outcome of a legal appeal to increase the amount it can charge customers.
12.41pm: Musk-Trump beef
With Elon Musk and Donald Trump's beef heating up again, analyst Dan Ives at Wedbush says "this BFF situation has now turned into a soap opera that remains an overhang on Tesla's stock with investors fearing that the Trump Administration will be more hawkish and show scrutiny around Musk related US government spending related to Tesla/SpaceX and most importantly the autonomous future with the regulatory environment key to the future of Robotaxis and Cybercabs".
Shares in Tesla are down more than 6% at around $298.35 in premarket trading now, with Ives saying Wall Street will "show concern" that the Trump and Musk relationship is backfiring and turning into "a junior high school friendship gone bad".
However, he believes the "situation will settle and at the end of the day Musk needs Trump and Trump needs Musk given the AI Arms Race going on between the US and China".
Musk and Trump are jabbing at each other as the budget bill rolls through Congress but Ives says Tesla investors "want Musk to focus on driving Tesla and stop this political angle...which has turned into a life of its own in a roller coaster ride since the November elections."
Being on Trump's bad side "will not turn out well", but Wedbush is maintaining its our OUTPERFORM rating and $500 price target.
12.19pm: Stock markets mostly red
The FTSE 100 and other European stock market benchmarks are mostly in the red, with US futures also pointing lower.
Concerns about an EU framework deal are creeping back, despite optimism in some reports from the fringes of the talks.
"With President Trump’s 9th July tariff deadline fast approaching, global markets remain highly sensitive to trade developments," says market analyst David Morrison at Trade Nation.
He points to "mixed" signals from the White House, including officials hinting at flexibility over the deadline date, but others suggesting the President may proceed with tariffs unilaterally, with letters to be sent to foreign governments, bypassing ongoing negotiations.
Morrison feels traders are "cautiously optimistic" that deals will materialise in time, especially after Canada reversed its digital services tax in an effort to keep trade talks alive and a framework was agreed with China.
"But the EU is a different proposition," he acknowledges. "It must marshal all its heads of state, some of whom have expressed a visceral dislike of the current US President, while believing it is their job to stand up to him, whatever the consequences."
In currency markets, the dollar index has extended losses, falling below 96 for the first time in 40 months, back up to 96.51 now. The euro rallied above $1.180 as the dollar suffers from ongoing concerns over trade, national debt and Fed independence.
Sterling is up was also strong, with the GBP hitting $1.3788, its highest level since the autumn of 2021.
11.29am: Sainsbury's views
For Sainsbury's, the performance of the core grocery business was the highlight, beating the top end of the company's polled estimates, says UBS, which has nudged up its share price target as a result.
Analysts at the Swiss bank note three key points: grocery sales were 5.0% compared to 3.8% expected, with the company pointing to improving price position against all key competitors in the quarter.
Second, Argos is "on the mend", with sales up 4.4% to beat expectations, helped by warm weather and soft comparatives from last year as it gained share in a tough market with deflation.
Third, full-year guidance was reiterated, weighted to the second half as previously guided.
"A solid start to Q1, which has historically been the second most important quarter well underpins the guidance. Improving price competitiveness and strong Grocery delivery should reassure. Continued strong trading momentum in a rational market could drive upside to the profit outlook."
Orwa Mohamad, analyst at Third Bridge, says Sainsbury’s has "done well to maintain and marginally grow market share by riding on Tesco’s coattails".
He explains that the chain has historically benefited from higher loyalty among customers, "and has managed to solidify this loyalty by improving price perception through Nectar prices and Aldi Price Match".
However, looking ahead, he says Sainsbury’s faces pressure from multiple fronts, with stores looking "tired", competition from discounters Aldi and Lidl at the bottom end, while premium occasions are slipping toward Marks & Spencer, and online customers migrating to Ocado, currently the fastest-growing UK grocer.
"Our experts highlight the significant crossover between Tesco and Sainsbury’s shoppers, a dynamic that leaves Sainsbury’s exposed if Tesco continues to execute well across convenience and digital channels."
10.56am: Footsie hit by banks and builders
The FTSE 100 and 250 have slid into the red.
Banks and housebuilders are both among the leading fallers, which paints a confusing picture about interest rate expectations, as what's good for one sector is not beneficial for the other.
But house price data from Nationwide is perhaps weighing on builders, with comments from Bank of England governor Andrew Bailey hitting banks.
Top fallers among the blue-chips also include aerospace pair Melrose Industries and Rolls-Royce, with defence giant BAE Systems not down as much.
Lenders Standard Chartered and Natwest are down almost 3% and 2% respectively, with Barclays down 1.8%, HSBC falling 13% and Lloyds down 0.6%. The bigger fallers have more of an investment banking focus than Lloyds, which is more tilted to UK mortgages.
Housebuilder Barratt Redrow is down 2.1%, Taylor Wimpey and Persimmon are down between 1% and 2%, with Rightmove also lower.
Earlier, Bailey said in a TV interview that the UK jobs market "is softening", with wage growth starting to ease.
"I think the path of interest rates will be gradually downwards, I’ve not changed my mind on that," Bailey told CNBC.
He said the recent drop in energy prices after the Israel-Iran ceasefire last week was a helpful backdrop to the Bank’s next interest rate decision in early August, where markets are pricing a 75% chance of the BoE's monetary policy committee cutting the base rate to 4% from the current 4.25%.
10.05am: UK house prices in 'temporary summer soft patch'
UK house prices fell by 0.8% in June, according to Nationwide data out today, more than undoing the 0.4% rise recorded in the month of May.
The housing market is often volatile from month to month, says EY Item Club economist Matt Swannell, which was exaggerated by April’s change in stamp duty thresholds.
"Over the last few months house prices have chopped sideways," he said, with the annual growth rate slowing to 2.1% in June from 3.5% in May.
"The change in stamp duty thresholds distorted the market over the first half of the year. In the run up to the April deadline, the market strengthened as transactions were rushed through. But that momentum proved temporary, and transactions fell substantially into April.
"Since then, the housing market has been in a soft patch, but we think this will prove temporary, with the rise in May’s mortgage approvals for new home purchases, which lead housing transactions, already indicating it’s starting to fade.
"The housing market should see a modest pickup in the second half of the year as further interest rate cuts and a relatively low unemployment rate support demand.
"However, with house prices remaining high, affordability challenges and ongoing economic uncertainty will likely hold back some buyers."
9.49am: Trade optimism or risk worries?
Some reasons for optimism on US trade deals are in the air, with the EU saying today that it would accept a 10% universal tariff on most of its exports, although it was looking for exemptions on autos, steel and aluminium.
Brussels and Washington are confident that an interim agreement can be completed in time before the deadline, according to reports, which would allow discussions to continue.
But overall there is a "mild risk off tone to markets" so far today, says market analyst Kathleen Brooks at XTB, as the focus swings back to trade deals as Donald Trump's July 9th deadline nears.
"Fears are mounting that the UK and China are the only countries with agreements in place," she says, with the rally in US, Asian and some European indices in the past three months seemingly driven by hopes that Trump would perform his usual ‘TACO’ and cave in at the last minute.
"If he doesn’t do this or if he doesn’t kick the can down the road, then the stock market rally could come to an abrupt halt."
Japan’s Nikkei has tumbled 1.2% on Tuesday, after Trump threatened to increase tariffs, saying that Japan remained unwilling to accept US rice exports.
"This is a sign that the US President is willing to play hardball with trading partners, even though we are days away from the 9th July deadline to reach agreements," says Brooks, but there are no signs that Japan will submit.
European stocks are lower as defense stocks have lost momentum, she notes, with Germany’s Rheinmetall down more than 5% in the past month, car companies have lagged too, suggesting that tariff risks are starting to weigh on European stocks, "and it could be a tough start to July".
Trump imprints are also notable in US stocks in the pre-market trading, with Tesla shares slumping nearly 4.5% on Tuesday morning, after the US President's feud with Elon Musk seemingly reigniting over comments that the EV company boss has benefitted excessively from government subsidies and got "more subsidy than any human being in history".
In a post on his Truth Social platform, Trump said Tesla’s federal support should be examined, warning that "Without subsidies, Elon would probably have to close up shop and head back home to South Africa."
There could also be a focus on Apple later, with Bloomberg reporting that the iPhone maker is considering bringing in outside help from either OpenAI or Anthropic to power its Siri app.
9.09am: Mid-caps making progress, warnings from small cap pair
The FTSE 100's gain is down to under 10 points now, reflecting the precarcity mentioned below.
Meanwhile, London's mid-caps are making a bit more progress, with the FTSE 250 up 0.2% to the blue-chip index's 0.1%.
In mainland Europe, the DAX and CAC are both down 0.1%, with fallers including construction materials, carmakers and defence.
Back in London, there are sharp falls for packaging group Mpac Group (LSE:MPAC) due to lower US orders, and food wholesaler Kitwave Group PLC (AIM:KITW), which warned of fragile consumer confidence hitting the outlook.
Mpac shares have plunged 27% after the packaging group warned on profits after a "material" slowdown in order intake in the second quarter, particularly in North America, which results in it needing to take action to stop debt from nearing covenant limits.
CEO Adam Holland said the past few months have seen "the impact of US trade tariffs, falling consumer confidence, and growing economic uncertainty. Customers have increasingly chosen to defer capital investment decisions, with the Americas region being at the epicentre, with other regions less impacted to date."
Kitwave, meanwhile, released interim results showing revenues up 27% and adjusted profit up 22%, but said that the period since early May "the volatility in the macroeconomic backdrop has caused a more pronounced fragility in consumer confidence which is adversely affecting volumes in the destination leisure sector.
"Whilst footfall is up from the prior year, consumption is down in certain areas. This impact has been particularly visible in our higher margin tourism-based depots."
Analysts at broker Stifel have cut their adjusted EPS forecasts by 16% for this year and 10% for FY26.
8.40am: Markets minefield
Some analysts are highlighting the precarious nature of the market's positivitiy and recent gains.
"US equities are back at all-time highs," says Ipek Ozkardeskaya at Swissquote Bank. "Most headlines credit the rebound to optimism around trade negotiations – hopes that deals will be struck before the July 9 deadline – and expectations that the Fed could cut rates sooner rather than later.
"But this rally is mostly driven and shouldered by AI optimism – the rest remains uncertain. The trade headlines, while encouraging, aren’t especially promising. The negotiations with Japan are bumpy. The Japanese, understandably, are reluctant to buy American rice, and as a result, they may soon receive a ‘reveal letter’ detailing the tariff rate they’ll be subjected to.
"As for the EU, talks are just as uncertain. Europeans could accept 10% universal tariff but demand exceptions for key sectors like drugs, alcohol, chips, planes, cars, steel an aluminum that they might not get."
On the monetary policy front, Fed chair Jerome Powell remains reluctant to cut rates when inflation could still be affected by tariffs, reinforced by last week’s core PCE data coming in hotter than expected.
"This doesn’t seem fully priced into markets," says Ozkardeskaya. "There’s a clear mismatch between how markets are positioned and the risks that remain on the table."
Retail investors are driving the rally, she says, with data showing that institutional demand has improved slightly, but remains "lukewarm", which is "understandable, given the trend in earnings expectations".
Ahead of the upcoming second-quarter earnings season, average S&P 500 earnings growth estimates have been revised down from 9.4% at the end of March to just 5%, according to FactSet.
"That downgrade is barely reflected in market pricing, making the upcoming earnings season a potential minefield," says Ozkardeskaya.
8.12am: FTSE 100 starts higher
The FTSE 100 has started July in a better mood than expected, getting out of bed with a 22-point gain to 8,784.3.
J Sainsbury PLC (LSE:SBRY) is topping the early leaderboard, up 1.8% after a solid trading update. M&S and Tesco are also up over 1%.
Miners, including Fresnillo, Antofagasta and Glencore, are up there too, as well as National Grid and SSE.
7.59am: Ofgem approves £24bn of network funding
National Grid PLC (LSE:NG.) and SSE PLC (LSE:SSE) are among the grid operators that have been given provisional approval for £24 billion of government funding to enhance UK energy security and support renewable energy transmission, including the largest expansion of the electricity grid since the 1960s.
More than £15 billion will be used to maintain and operate the gas transmission and distribution networks, with an initial £8.9 billion invested in the high-voltage electricity network, as well as an additional £1.3 billion under a ‘use it or lose it’ basis.
This £8.9 billion investment includes £4.2 billion for National Grid, £3.1 billion for SSE's Scottish & Southern Electricity Network (SSEN) and £1.6 billion for Scottish Power.
It is the first tranche approved as part of a wider £80 billion investment programme expected over the five-year regulatory period.
7.47am: Sainsbury's Q1 update
J Sainsbury PLC (LSE:SBRY) has reported a 4.9% increase in total sales in the first 16 weeks of its financial year, with grocery sales rising 5.0%, general merchandise and clothing up 4.2%, and Argos sales up 4.4%.
Like-for-like sales excluding fuel increased by 4.7%. This compares to 3.2% LFL sales for the whole of last year.
For the full year, the FTSE 100 group said it continues to expect a retail underlying operating profit of around £1 billion, weighted more towards the second half than was seen last year, with retail free cash flow of more than £500 million.
7.32am: Aviva's DL deal waved through
Aviva's takeover of Direct Line is not going to be referred to a deeper 'phase 2' investigation, the Competition & Markets Authority says.
"The CMA has cleared the anticipated acquisition by Aviva plc of Direct Line Insurance Group plc. The full text of the decision will be published shortly."
7.24am: Shop price inflation returns
Shop price inflation returned last month, figures from the British Retail Consortium and NielsenIQ show, with a 0.4% rise in June compared to a year ago, after declining in every month so far this year.
Food inflation increased to 3.7%, up from growth of 2.8% in May, 2.6% in April and 2.4% in March.
Fresh food inflation increased to 3.2%, up from 2.4% in May.
"Food inflation showed little sign of slowing down," said BRC chief executive Helen Dickinson, "particularly in fresh produce, where prices of meat have been impacted by high wholesale prices and more expensive labour costs. Meanwhile, fruit and vegetable prices increased due to the hot, dry weather reducing harvest yields."
7.16am: FTSE 100 to make flat start to July
A flat FTSE 100 start is expected on Tuesday, the first day of July, despite the new record highs seen across the Atlantic overnight.
Futures for the London index are pointing to a decline of one point, after it lost 40 on the first day of the week to finish at 8,760.96.
Overnight, the S&P 500 rose 0.5% to bag a fresh all-time high, with the Dow Jones up 0.6% and the Nasdaq Composite 0.5%.
These highs were fueled by growing optimism around US trade deals and the possibility of a Federal Reserve rate cut coming sooner rather than later.
Asian markets are mixed this morning, with Japan's Nikkei and Hong Kong's Hang Seng both in the red, while the Shanghai Composite and India's Sensex are higher.
6am: What to watch on Tuesday 1 July
The UK's grinding grocery price inflation could be the story as we begin the second half of the year on Tuesday, though J Sainsbury PLC (LSE:SBRY) is likely to skirt around saying as much in its first-quarter results.
At its final results, Sainsbury’s said it had invested £1 billion into "lowering our prices" while meanwhile it made over £1 billion of underlying profit from sales of £31.6 billion in sales.
But the sector has been raising prices for some time, as anyone who does the weekly household shop will have noticed. Supermarket price inflation was 4.7% in the past month, versus 4.1% in May and the highest since February 2024’s 5.3%, according to research by Kantar.
For the first quarter, UBS forecast sales growth of around 4% from the grocery business, while Citi's forecast is slightly lower as it expects a low-key performance from the grocer and both sets of analysts do not expect the outlook to be lifted alongside the trading update.
Separately, the BRC shop price index will also be published overnight, showing what levels of food and non-food price inflation was seen in June, with the retail trade body having been at pains to regularly point out that its members are raising prices to cover higher costs from increased employers’ National Insurance contributions and minimum wages.
Announcements expected:
Trading updates: J Sainsbury’s
Interims: Kitwave Group, Wynnstay Group
Finals: Augmentum Fintech, Gateley Holdings, Mercia Asset Management, Supreme
Economic announcements: Nationwide House Price Index (UK), BRC Shop Price Index (UK), PMI Manufacturing (CHN, UK, EU, US), Inflation (EU), Unemployment Rate (GER), ISM Manufacturing (US), ISM Prices Paid (US), JOLTS Job Openings (US)