- FTSE 100 up 18 points at 9,157 points
- Babcock leads the blue-chip winners
- Why UK small-caps are struggling
5.02pm: FTSE 100 higher at the close
The FTSE 100 moved higher at Monday’s closing bell in London, adding 18 points to 9,157 points.
Oil prices dropped while precious metals prices were up slightly as investors awaited the outcome of meetings between Trump and Zelenskyy and EU leaders on the fate of Ukraine.
“European and US natural gas prices continued to slide amid fading supply-risk premia ahead of Monday's Washington DC Trump-Zelenskyy meeting,” IG senior technical analyst Axel Rudolph said. “Dutch TTF hit is lowest level since May 2024 as US natural gas prices saw four straight weeks of falling prices.”
4.10 pm: Back in the green
Heading into the final few minutes, and there we've seen some nibbling buying activity to take the blue-chip index into the green. Will it hold?
Down in among the mid-caps, Close Brothers Group fell 4% after RBC Capital Markets downgraded the specialist lender from 'sector perform' to 'underperform', warning that pressure on margins and regulatory capital is likely to drag on profitability.
RBC’s analysts lowered their price target from 825p to 600p and flagged several headwinds, including muted loan growth, falling net interest margins and uncertainty around dividend payouts.
Close Brothers is currently in discussions with the Prudential Regulation Authority about its Internal Ratings Based (IRB) model application, but RBC does not expect clarity until at least mid-2026.
2.40 pm: Dull, dull, dull
New York made a sluggish start to proceedings, which simply helped to anchor the UK blue-chip index firmly to the fence.
As mentioned below, traders are sitting on their hands ahead of the meeting between the Trump diplomatic team and Volodymyr Zelenskyy to secure peace with Russia.
Given the rhetoric ahead of the tête-à-tête, it looks unlikely that the Ukraine war will be resolved quickly and without complication.
The Europeans, like the shy teenagers at a high school dance, have been relegated to the sidelines, with Kier Starmer et al providing moral support from presidential suites of DC.
1.45 pm: UK small-caps lagging European peers
Another dull summer afternoon with scant trading activity and zero corporate news to provide some spice.
So, we've delved into the research files to bring you some insights into just why growth companies are failing to fire:
UK small-cap shares are having a mixed year, trailing their eurozone counterparts and struggling to gain sustained momentum.
According to a note from JP Morgan, this underperformance reflects weaker economic indicators at home, particularly business activity surveys, which have a strong historical correlation with the relative performance of UK small caps.
The sector's relative performance is strongly correlated to the activity momentum, the bank noted.
And at the moment, that momentum is firmer on the continent than in the UK.
Purchasing managers’ indices, which track private sector activity, have been more positive across the eurozone, where smaller companies are outperforming their large-cap peers.
The difference in policy backdrop is also playing a role. “Eurozone fiscal tailwind is likely much stronger than the UK one,” JPM wrote, pointing to the broader support measures available in European economies compared with the more constrained UK outlook.
While UK small-cap investors may be waiting for better days, the picture is more encouraging elsewhere.
The American argues that selected international small-cap markets now offer a better balance of risk and reward, supported by attractive valuations, light investor positioning, and the sheer length of their recent underperformance.
“Valuations of small caps are attractive in most places,” the analysts say, and after years of lagging, the bar for improvement is low.
12:20 am: Babcock leads the Footsie
Babcock International shares climbed more than 4% on Monday, topping the FTSE 100, after RBC Capital Markets initiated coverage on the defence engineering group with an ‘outperform’ rating and a 1,200p price target.
In a bullish 40-page note, RBC argued Babcock is now "a significantly better-quality business" nearly five years into its turnaround, but still trades at a steep discount to its European defence peers.
On a 12-month forward basis, the stock sits on just five times earnings, compared with 10 times for the broader sector.
The Canadian bank cited improved management execution, reduced contract risk and rising earnings quality as key drivers behind the call.
11:00: Slow day as Footsie retreats
After a positive start, the FTSE 100 was down 10 points. Traded volumes were low, as is the norm during the London holiday lull.
As mentioned earlier, there was also some nervousness set in ahead of talks between the Trump administration and Volodymyr Zelenskyy aimed at ending the war in Ukraine.
Looking to the US, the stock futures were indicating a similar story in New York after last week's strong showing amid heightened hopes the Fed will begin cutting interest rates.
9.20 am: Blue-chips lose lustre
The FTSE 100 saw its early gains eroded as nervousness set in ahead of talks between the Trump administration and Volodymyr Zelenskyy aimed at ending the war in Ukraine.
Zelensky and European leaders are preparing for potentially difficult proposals from Donald Trump.
Ahead of the talks, the US president has already dismissed the prospect of Ukraine regaining Crimea, occupied by Russia since 2014, or joining the Nato alliance.
On the markets, the miners bore the brunt of the selling activity, with Glencore leading the losers' list.
8.20 am: House sales on the rise
Morning folks. The housing market has suddenly found a bit of puff in July.
According to Rightmove, the number of agreed sales was up 8% on last year, making it the busiest July since the heady days of 2020, when lockdown escapees were stampede-buying countryside boltholes under the stamp duty holiday.
This time, the catalyst is less romantic: sellers are chopping asking prices to tempt buyers in an overcrowded market. Average new listings in August slipped another 1.3% to £368,740, following bigger drops earlier in the summer.
Land Securities has flogged Queen Anne’s Mansions in London to Arora Group for £245 million as it doubles down on its plan to ditch offices in favour of building a chunky £2 billion residential portfolio.
Cranswick, the pork and poultry group, is in the frying pan after fresh allegations of animal cruelty at one of its pig farms led supermarkets to sever supply ties. That follows a string of similar headaches earlier this year.
7.20 am: Tentative start predicted
UK stocks look set to make a tentative start ahead of talks between the Trump administration and Volodymyr Zelenskyy aimed at ending the war in Ukraine.
In London, the blue-chip index is set to open around 14 points higher at 9,1352.9, according to the spread betting firms.
Overnight, the price action in Asia was mixed, but largely positive.