- FTSE 100 falls 10 points to 8,775
- PM Starmer fails to guarantee his Chancellor's future
- Bond markets send gilt yields spiking
- Greggs and Bytes issue modest profit warnings
- Spectris accepts rival offer from KKR
5.15pm: FTSE 100 closes down
The FTSE 100 closed down 10 points at 8,775.
Meanwhile, US stocks moved higher after it was revealed the United States has reached a trade deal with Vietnam, US President Donald Trump announced in a post on his social media platform Truth Social.
The US will impose a 20% tariff on goods imported from Vietnam, a reduction from the initially proposed 46% tariff announced in April 2025.
Vietnam will impose a 40% tariff on any transshipped goods, products routed through Vietnam from other countries, notably China, to prevent circumvention of US tariffs.
In exchange, Vietnam will open its market to U.S. products with zero tariffs.
4.11pm: Footsie heading for small loss
London's blue-chip index was heading for a small gain on Wednesday, but now looks likely to retreat.
This follows a spike a government bond yields as markets were spooked by suggestions that Rachel Reeves had lost the confidence of Keir Starmer, after his apparent refusal to back her in his weekly Commons questions.
Gilts were sold across the board as a result, lifting yields and hitting stocks. While 2yr yields have now dropped back, the 10yr and 30yr remain elevated.
Big fallers on the Footsie are housebuilders, with Berkeley and Persimmon down 8.2% and 6.4%, Barratt Redrow is down 5%, Taylor Wimpey 4.4%.
Medical device maker ConvaTec, retailer M&S, property developer Land Sec, lender NatWest and defence group Babcock are next, all down more than 4%.
Top risers are commodities related: Glencore, Antofagasta, Anglo American, BP, Rio Tinto all up between 5.1% and 2.7%.
3.55pm: US agrees trade deal
Donald Trump has been posting.
First, he says, "I just made a trade deal with Vietnam".
Following talks with To Lam, general secretary of the Communist Party of Vietnam, he writes that it will be "a great deal of cooperation between our two countries", with Vietnam paying the US "a 20% tariff on any and all goods sent into our territory, and a 40% tariff on any transshipping".
In return, he says, "Vietnam will do something that they have never done before, give the United States of America total access to their markets for trade [...] meaning that, we will be able to sell our product into Vietnam at zero tariff".
He follows this up with a post about his tax and spending bill.
"The one big beautiful deal is all about growth," he writes (in full caps). "If passed, America will have an economic renaissance like never before. It is already happening, just in anticipation of the beautiful bill. deficit cut in half, record investment – cash, factories, jobs pouring into the USA."
3.45pm: Tesla bounces
Tesla shares are up almost 5%, following the Trump beef dip yesterday, with a rally after it announced a fall in second-quarter delivery numbers that was no worse than analysts expected.
These came in at 384k vehicles, pretty much in line with the Wall Street consensus forecast of 385k.
Model 3 and Model Y deliveries for the quarter came in at 373.7k, above forecast, while other models saw 10.4k deliveries, slightly below.
Analyst Dan Ives at Wedbush says: "While the company has seen significant weakness in China in previous quarters given the rising competitive landscape across EVs, Tesla saw a rebound in June with sales increasing for the first time in eight months reflecting higher demand for its updated Model Y as deliveries in the region are starting to slowly turn a corner with China representing the heart and lungs of the TSLA growth story."
In the face of more low-cost models entering the market from Chinese OEMs like BYD, Nio and Xpeng, Tesla fought back with updates to its Model Y, helped by an accelerated production ramp-up in Shanghai.
2.54pm: Mixed markets
UK bonds have accepted a little of the Downing Street reassurance, but the 10yr gilt yield remains elevated and the FTSE 100 and 250 are down 0.5% and 1.55% respectively.
Across the pond, Wall Street has opened unconvincingly too.
The S&P 500 is flat, the Dow Jones is down 0.2% and the Nasdaq Composite is up 0.3%.
Nvidia, Apple and Tesla are all higher, up 0.8%, 1.7% and 3.1%, but more of the rest of the S&P top 20 are in the red, though not many are moving more than 1%.
1.53pm: Bond markets worried Reeves could be replaced by 'more left-leaning chancellor'
Commenting on the market's reaction to the PMQs session in Westminster, market analyst Kathleen Brooks at XTB says Rachel Reeves looked "visibly distressed" and bond yields were rising over the "prospect of political turmoil".
"The PM might be keeping his options open at this stage, but the Chancellor is a strange choice to axe from a market perspective," Brooks says.
"The market is pricing in the possibility of a replacement chancellor with a more left-leaning agenda, which is spooking the bond market and waking up the bond vigilantes from their slumber."
As well as 10-year yields reversing their recent decline to test the 4.6% level, the 30yr yield is "set to see its biggest one-day increase since the 3rd April, after President Trump’s announcement of reciprocal tariffs".
The pound is down 1% against the dollar at $1.3603 and 0.7% against the euro at £0.8645.
Sterling is now the weakest currency among the G10 currencies space, Brooks says. "This is a sign of fiscal stress, which the UK has had to weather before."
"Will a surge in borrowing costs, even though the Bank of England is set to cut rates next month, cause another U-turn on benefit spending? Will there be cuts announced elsewhere, or will the government try and tap the taxpayer for more funds?"
Brooks points out that gilt yields had been falling on news around cutting the benefits bill, "suggesting that the bond market is receptive to highly indebted countries cutting spending. The reversal on these public sector spending cuts is having the opposite effect."
If yields continue to rise further over the next few days, the PM and Chancellor "will have to decide if they want to have a sensible fiscal policy whereby public sector debt is reigned in, or whether they want to please the Labour backbenches, who don’t seem worried by rising debt levels and forget that we are in a new era, where bond investors can shun sovereign debt in favour of less risky, less indebted corporate debt," says Brooks.
"Overall, this could be the start of another fiscal crisis for the UK."
1.39pm: Bond market suspicious
Downing Street says Reeves is "going nowhere" and "has the prime minister’s full backing".
Starmer's press secretary says he did not repeat his backing of the chancellor as "he has said it plenty of times, he doesn’t need to repeat it every time the leader of the opposition speculates about Labour politicians".
Nevertheless, the 10-year gilt yield was up around 22 basis points at 4.681%, its highest in over three weeks. Rises are across the board, with the 2yr and 30yr yields also rising by a similar amount.
1.28pm: Gilts spike and shares fall
UK government bonds, ie gilts, sold off following the exchanges in Prime Minister's Questions, resulting in gilt yields spiking higher, with the FTSE 100 0.3% lower and the more domestically focused FTSE 250 down 1.5% now.
Keir Starmer failed to repeat his promise on whether Rachel Reeves will remain as chancellor until the next election, after the leader of the opposition said Reeves was a "human shield" for his "incompetence".
Kemi Badenoch said the PM's welfare bill "was there to plug a black hole created by the chancellor" and that Labour MPs "are going on the record saying that the chancellor is toast, and the reality is that she is a human shield for his incompetence. In January, he said that she would be in post until the next election. Will she really?"
Starmer skirted this question of Reeve's future.
Shortly after, Reuters reported that Reeves hasn't offered her resignation, according to Starmer's press secretary, and that she has the PM's "full support".
On Reeve's tearful appearance, a Treasury spokesperson said it "is a personal matter, which we are not going to get into".
Meanwhile, US bonds are unmoved, showing it was a UK-isolated issue.
UK gilt market right now pic.twitter.com/ueDgzC74d1
— Michael Hewson ???????? (@mhewson_MCH) July 2, 2025
1.09pm: Chancellor's future in doubt
The FTSE 100 and FTSE 250 have both suddenly sunk. The FTSE 250 is down 1.3%, the blue-chip index is just below flat.
Not sure if this is related to reports from Westminster. Chancellor Rachel Reeves appeared to be in tears on the front bench of the House of Commons.
Prime Minister Keir Starmer failed to guarantee the future of Reeves' position as Chancellor until the next election, as the leader of the opposition questioned whether she would resign.
This followed Starmer refusing to rule out tax rises in the autumn Budget.
US stock futures have also taken a dive, now pointing to a mixed start to the day's trading on Wall Street.
Futures for the S&P 500 are flat, those for the Dow Jones are up 0.1%, while Nasdaq 100 futures are down 0.1%.
12.44pm: Commodities lead Footsie gains
The FTSE 100 remains modestly higher, up 0.2% with BP and Glencore top of the leaderboard, while the FTSE 250 is down 0.7% due to falls for Greggs and Bytes Technology.
Among the blue-chip fallers is National Grid PLC (LSE:NG.), down 1.6% as regulator Ofgem launches an investigation into the Heathrow fire in March after a report found it was caused by a preventable fault.
Heathrow said the power outage highlights "inadequate safety mechanisms and National Grid’s failure to maintain its infrastructure".
In other utilities news, from today, households will get double the previous compensation of £1,000 if their water companies are at fault for any flooding issues, while there will be up to a tenfold increase in the payment for consistent low water pressure, at £250, up from £25.
This was first announced last August.
11.20am: M&A research finds rising numbers of trade buyers
The rush of M&A interest in UK companies is the "most intense period of UK takeovers in recent years", says Peel Hunt as it highlighted the continued volume of deal action in the first half of 2025.
M&A deals have been overwhelmingly focused on mid-caps, as today's deal for Spectris has further highlighted.
The report from Peel Hunt shows that 97% of all firm offers have been at a value of less than £2 billion.
"However, the volume of such activity has been plain to see – at the current run rate, 2025 will be the most intense period of UK takeovers in
recent years, averaging two new bid situations per week," says Michael Nicholson, the broker's head of advisory & M&A.
While last year saw US PE firms like KKR - the famous 'barbarians at the gate' - dominate dealmaking and still a major presence, including KKR bagging Spectris today, they have "met their match in the form of UK-listed consolidators", says Nicholson.
This has also been echoed in research by AJ Bell, which agreed that trade buyers were more active than private equity in first half as almost 50 UK-listed companies were subject to takeover interest or put themselves up for sale.
Analyst Dan Coatsworth at AJ Bell says: “Private equity companies haven’t been as prolific or successful with UK takeovers this year as their reputation implies. It’s easy to suggest they are behind most bids, yet data tells a different story."
The research also found that five of the six abandoned bids so far in 2025 involved private equity companies.
"Trade buyers will take a long-term view of a company’s potential worth and they are often happy to pay a fair price. In contrast, private equity tends to have a shorter timespan and they want to be able to flip an acquisition within three to five years at a profit," Coatsworth says.
"Those different time horizons can have a big impact on how much each party is prepared to pay in a takeover."
However, the average premium for both trade and private equity deals so far this year is exactly the same at 34%, the research found.
10.36am: TSB deal for Santander a bit surprising
Analysts at Citi say it is "somewhat surprising" that Santander has chosen to buy TSB, using roughly half of the capital freed up from the disposal of a 49% stake in a Polish business.
The agreed price for TSB, an underperforming subsidiary of Sabadell, at 1.45 times first-quarter tangible book value, suggests Santander shareholders "might be losing some of the value of the targeted synergies" to Sabadell shareholders.
With some nostalgia-led media headlines lamenting the potential loss of the TSB brand from the high street, Nick Sherrard, managing director of Label Sessions, said: "2025 has seen a lot of well-known brands leave the UK high street - though, in this case, it seems driven more by the restructuring of banking across Europe than the dynamics of the market here.
"For Santander this will accelerate its growth and, given the bank's track record in integrating complex businesses, the acquisition seems a smart next step in building a more successful UK operation."
He notes that the TSB brand has "lots of strengths... Santander should be careful not to lose", including its Labs programme known for fostering real collaboration with fintechs, though TSB has been a little tainted of late by tech issues.
10.15am: TSB takeover
Shares in Barclays PLC (LSE:BARC) are up 2.4%, along with similar gains for other banks, following news that Santander is expanding in the UK with the purchase of TSB from fellow Spanish lender Sabadell.
Santander has agreed to acquire TSB for an initial £2.65 billion, which could result in a new dynamic on the UK’s high street banking landscape.
The deal is expected to close by early 2026, with Santander apparently beating Barclays, which was reported to have made a £2.6 billion bid.
Santander said the takeover would make it the UK’s third-largest bank by personal current account deposits, behind Lloyds Banking Group and Barclays, and leapfrogging HSBC.
9.52am: Some sense of optimism
London's blue-chip index earlier benefited from its "tech-light bias", says Derren Nathan, head of equity research at Hargreaves Lansdown.
AJ Bell's Dan Coatsworth also notes the gains for commodity producers, financials, utilities and industrials on the UK stock market.
"The fact both risk-on and defensive sectors moved higher would suggest a general sense of optimism among investors," he says.
The market's attention is on Donald Trump's tax bill, developments on trade talks between the US and India and lack of developments with Japan.
"Trump seems optimistic about striking a deal with India, yet there would still be a long list of other countries that need to do the same before 9 July if they want to avoid high tariffs," says Coatsworth.
On Greggs, he says it is a pretty "mild profit warning" and observes that "companies love to blame the weather for poor sales but it’s normally down to rain and low temperatures rather than sunshine and heat".
As Nathan points out, sausage rolls are not the first thing most consumers yearn for when temperatures get into the 30s.
Brent crude oil prices up slightly today at around $66.8 per barrel, Nathan notes that US crude inventories rose last week, breaking a four-week run of declines, "raising concerns that North American demand may not be quite as robust as it appeared to be".
9.05am: FTSE flattened despite lift from oil
The FTSE 100 is just five points in positive territory after the first hour of trading.
Oil giant Shell and BP, up 0.9% and 2.1%, are providing a lift after a small spike in crude prices on the back of headlines out of Iran, including US reports that Iran planned to mine the Strait of Hormuz, and that Iran has suspended cooperation with the UN nuclear watchdog.
Retailers, gold miners and housebuilders are leading the fallers in London.
On the Continent, the DAX index is up 0.3% in Frankfurt and the CAC has gained 0.5% in Paris.
8.34am: Spectris gets new bid, SSP's Indian JV nears
At the top end of the FTSE 250's movers this morning is SSP Group plc (LSE:SSPG), up 6.8% after the Upper Crust owner gave an update on the planned listing of its Indian joint venture, Travel Food Services.
TFS has filed a prospectus with Indian regulators, setting an IPO price band between 1,045 and 1,100 Indian Rupees per share, implying a market valuation for TFS of approximately 137.6 to 144.8 billion Indian Rupees, or £1.17-1.23 billion at current exchange rates.
Trading should begin of TFS shares on the Bombay and National Stock Exchanges on Monday, 14 July.
Elsewhere, the board of Spectris PLC (LSE:SXS) switched its backing to a £4.1 billion cash offer from KKR, which trumped a £3.8 billion deal agreed last week with another US private equity firm, Advent International.
Under the terms of the KKR offer, Spectris shareholders will receive £40 per share, including £39.72 of cash from KKR's bidco and a 28p interim dividend payable by Spectris.
The offer price represents a significant premium of around 6.3% to the Advent offer and approximately 96% to the share price before bid interest was first revealed.
8.15am: FTSE 100 rises, FTSE 250 falls
The FTSE 100 has advanced by 23 points to 8,808 in early Wednesday trade.
Banks and miners are powering the gains, with Glencore, Standard Chartered, Barclays and Anglo American leading the risers.
The FTSE 250 is down 0.2% as Greggs has dropped 14% after its tepid trading update, which contained a warning of "modestly" lower profits.
Similarly, Bytes Technology Group has tumbled 23% after warning that it now expects operating profit to be "marginally" lower than last year.
8am: Ryanair hit by Middle East conflict
Ryanair says it completed over 109,000 flights in June, with more than 800 cancelled due to the Middle East conflict.
Just under 20 million passengers were carried last month, up 3%, and at a load factor of 95%.
Analyst Alexander Paterson at Peel Hunt say this was slightly lower than expected, due to the Middle East cancellations.
Also in the travel sector, his colleague Ivor Jones has cut his price target for Intercontinental Hotels Group PLC (LSE:IHG) in light of weaker US travel data.
But he says that with IHG shares down 17% this year (but only down 9% is US dollars) compared to Marriott being down 2% and Hilton up 8%, "there is scope for IHG to catch up with peers"...as "despite lumpy US domestic travel data, we believe IHG can achieve 13% YoY operating profit growth in FY25".
The Holiday Inn owner only needs "modest" LFL growth to deliver its target 12-15% EPS growth rate and continue to return surplus capital.
Peel Hunt's 'add' recommendation was reiterated, but target price cut from 10,670p to 9,500p.
7.36am: Too hot for Greggs
Greggs PLC (LSE:GRG) has warned that full-year profits are likely to fall "modestly" compared to last year, as it blamed slower growth in recent weeks on hot weather reducing footfall, even though it increased cold drinks demand.
In a half-year trading statement, the FTSE 250-listed baker revealed total sales of £1.03 billion, up 6.9% compared to the prior year, or 2.6% on a like-for-like basis.
This was down from the 7.4% total and 2.9% LFL growth recorded in the first 20 weeks of the year.
The said June sales "were impacted as very high temperatures affected the UK, increasing demand for cold drinks but reducing our overall footfall".
7.15am: FTSE 100 tipped for solid start
The FTSE 100 has been tipped to make a solid start on Wednesday, extending gains from the previous day and after a mixed session on Wall Street overnight.
Futures for London's blue-chip benchmark are pointing to a gain of around 21 points, which would add to the 24 put on the day before when the index closed at 8,785.33.
Last night, the Dow Jones rose 0.9% but the Nasdaq Composite fell 0.8% and the S&P 500 dropped 0.1% back from its recent record high, both dragged down by a 5.3% fall for Tesla after boss Elon Musk's spat with Donald Trump was reignited.
"Markets also seemed to wilt a little in the heat yesterday and struggled to keep up their recent momentum," says Jim Reid, macro strategist at Deutsche Bank.
This was despite a "small boost" from the tax bill passing the Senate with a 51-50 vote, with the revised now needing to be passed by both chambers of Congress before it can reach President Trump’s desk.
Reid says one of the most important developments of the last 24 hours was the latest US job openings report, which pointed to a tighter labour market than previously thought.
"Investors responded by lowering the likelihood of rate cuts this year, which led to a small spike in Treasury yields across the curve."
Asian equity markets outside of China are on the weaker side this morning, given concern over trade, led by Japan's Nikkei falling over 1% for the second day in a row.
6am: What to watch on Wednesday 2 July
The City of London diary is quiet for Wednesday, with a quarterly update expected from retailer Topps Tiles PLC (LSE:TPT) after it recently reported first-half profits ahead of forecast and said current trading in its third quarter was strong.
In a turnaround after a challenging time, first-half revenues increased 4.1%, with Pro Tiler revenues up 17.6%, Tile Warehouse sales doubled and core Topps up 2.2%.
In the first seven weeks of the second half, group sales were up 9.5%, which sets a high bar for today's third-quarter update.
Elsewhere, final results were pencilled in from engineer Renold PLC (AIM:RNO), though last month it agreed to a £187 million cash takeover by US private equity firm MPE.
Among the macroeconomic data, there are US jobs numbers from ADP that will form a preview of the US official jobs report the day after.
Announcements expected:
Trading updates: Topps Tiles
Finals: Renold
Economic announcements: Unemployment Rate (EU), MBA Mortgage Applications (US), Crude Oil Inventories (US), ADP Employment Change (US)