- FTSE 100 down 35 points to 10,462
- Oil prices oscillating on US-Iran talks in Doha
- UK manufacturing PMI data mixed
- UK house prices flat month-on-month
- ABF warns on sugar losses, Primark sales mixed
4.08pm: FTSE and European shares under water
With half an hour left of the day's trading, we're signing off here, as the FTSE 100 continues to wade in shallow water, while on Wall Street the Dow and the S&P are on dry land.
Continuing the analogy, all the European major indices have soggy socks, with the DAX seeing the shallowest losses, 0.1% lower, while the CAC is up to its ankles in Paris, down 0.9%.
Primark owner AB Foods is the biggest blue-chip faller in London, after its warning on large sugar losses, plus mixed retail sales.
Otherwise, the London index's defensive stocks are dragging, though earlier pressure from bond markets has abated a little.
Other defensive consumer names are declining too, with Diageo and BAT among the bigger fallers, while oil giants BP and Shell are weaker as Brent crude has slipped 2.3% to $71.30 a barrel.
The selling is broad-based rather than driven by one sector, suggesting a risk-off mood.
Defence sector names are topping the leaderboard, with Babcock up 5%.
On the mid-cap FTSE 250, CMC Markets has rocketed 40% higher after the online broker upgraded its profit outlook.
Across the pond, Meta is the biggest riser on the S&P 500, up over 10% on a Bloomberg report that the Instagram owner plans to sell spare computing power.
3.40pm: UK is 'selling the family silver'
UK-listed companies are being bought at a pace that Peel Hunt says amounts to "selling the family silver", as takeover bids swamp new listings in London.
"To say that the UK has a problem in retaining its companies and listing new ones would be a massive understatement in our view," wrote Charles Hall, the broker's head of research.
There are 29 bids currently running this year, worth £61 billion, following 40 bids worth £35 billion in 2025.
Hall has various reasons why, but he also offers some solutions, saying the market could be revived with a series of policy changes, arguing that "turbocharging UK equity markets is not difficult and can be done at pace".
One suggestion is to match tax benefits to domestic investment, while removing stamp duty on shares would provide "the biggest economic return for any tax change".
2.49pm: Nasdaq chips and hardware stocks lead sell-off
US stocks have opened lower, as expected, led by a 0.9% drop for the tech-heavy Nasdaq.
The Dow Jones has retreated 0.3% from its record high, while the S&P 500 has slid 0.5% in early trades.
Nasdaq 100 fallers are led by chip and hardware names.
Storage and memory stocks are leading the retreat, with SanDisk down 7.8%, Micron and Seagate are both down over 6%, while Western Digital is off 5.5%.
Semiconductor equipment stocks are also weak, with Applied Materials down 5.9%, Lam Research off 5.2% and KLA falling 4.8%. Among the bigger names, Nvidia is off 2.8%, AMD has slipped 3.2% and Intel is down 3.8%.
In the background, the Fed's Kevin Warsh has been speaking at the ECB conference in Portugal, keeping markets waiting for a clearer signal on rates, declining to give strong hints on whether the Fed could raise at its next meeting.
The new Fed chair said policymakers would wait for more data, while stressing that the central bank would stay focused on monetary policy and defend its independence in the fight against inflation.
He also said inflation risks and inflation expectations had eased in recent weeks, but did not give investors enough to push rate hike bets much lower.
The remarks leave this week’s US jobs data as the next major test for markets, with traders still pricing a meaningful chance of another move from the Fed.
Asked whether the market is in bubble territory, he says: “I'm not prepared to sort of make a broad comment denoting risks that are available in the system, but I will say this: this is the biggest time of consequence to each of our economies, I think in our lifetime.”
On productivity, he says: "If the last four quarters are an indication, there is reason to be optimistic."
2.04pm: Fundsmith lags again as it joins rotation out of Mag 7
Terry Smith's Fundsmith Equity fell 0.2% in June, lagging the MSCI World index, which rose 0.8% in sterling terms.
The fund's June update shows it down 2.9% so far this year, against an 11.2% gain for the benchmark.
The latest portfolio comment pointed to more changes ahead, saying: "We are in the process of making a number of portfolio changes which will be discussed in the semi-annual letter to shareholders which will be out shortly."
The biggest contributors in June were Fortinet, Stryker, Visa, Atlas Copco and Automatic Data Processing.
The biggest detractors were Microsoft, Meta, Alphabet, Amadeus and Texas Instruments.
There were also notable changes in the top 10 holdings, with Alphabet, Meta and Microsoft dropping out, while Philip Morris, Fortinet and Church & Dwight moved in.
1.41pm: TG Jones restructuring gets green light
TG Jones, the retail chain made up of former WH Smith high street stores, has been given the go-ahead to close up to 150 shops by the High Court.
The restructuring by private equity owner Modella Capital involves writing off debts to suppliers and cutting rent for many landlords, and could hit thousands of jobs.
Modella had threatened that administrators might need to be called in if the restructuring plan was not approved.
12.37pm: Markets mostly lower
The FTSE 100 remains in the red as we move into the afternoon, broadly in line with most European markets, as investors take some risk off the table.
London’s blue-chip index is down 0.5%, while France’s CAC 40 and Spain’s IBEX are off 0.7-0.8% and the Euro Stoxx 50 has slipped 0.3%.
Germany is the exception. The DAX is up 0.2% at 25,040.93, helped by strong gains for defence group Rheinmetall and Airbus.
The weaker tone is also visible in US futures, where Dow Jones futures are down 0.2%, S&P 500 futures are off 0.2% and Nasdaq futures have fallen 0.4%.
Wall Street stocks are pulling back amid some "modest losses across semiconductor stocks in early trade, following a stunning first half for the year", says market analyst David Morrison at Trade Nation.
He says the Magnificent Seven constituents have "lost some of their shine, particularly over the last month or so", with a differing of opinions on the market sidelines about whether this is a warning of more to come or whether the upcoming earnings season is another opportunity for corporations to show off outsized earnings growth.
"In the meantime, investors are considering a future environment with higher borrowing costs."
11.59am: Roads funding cut but some benefits for infrastructure contractors
Even though the increase in UK defence spending is coming from funding being shifted from some roads and energy budgets, there should still be money flowing through to the UK infrastructure construction sector, says Joe Brent at Panmure Liberum.
The analyst says Costain, Galliford Try, Kier and Morgan Sindall should benefit from higher defence infrastructure spending, with Serco also likely to see opportunities on the contractor side.
The £15 billion of extra defence funding over four years includes a renewed commitment to upgrade about 40,000 military homes, at a cost of around £9 billion over the next decade.
But Brent warns that major road schemes, some net-zero projects and parts of rail could face delays or cuts.
He sees Costain, Galliford and Kier as most exposed to roads capital budgets, though Galliford has shifted more towards council road work, where he sees less risk.
Overall, the Panmure analyst estimates the switch could mean a 4% annual reduction in UK public and regulated spend, but said this was "modest, and likely to be back-end loaded", adding that valuations across the sector remain "undemanding".
11.39am: Defence plan beneficiaries
Chemring and Babcock are likely to be major beneficiaries from the government's Defence Investment Plan announced yesterday, where £15 billion of extra funding was confirmed for the sector.
Jefferies analyst David Farrell says there are "some positives" for UK defence companies, even though the extra money sits against a reported £28 billion funding shortfall.
With about £300 billion of spending over the next four years outlined in the plan, meaning defence spending will rise to 2.7% of GDP in the 2029 financial year, Farrell highlighted £5 billion for drones and autonomous weapons, including the Common Combat Vessel (CCV) programme, and £64 billion for the nuclear deterrent, including submarines and upgrades at Faslane, Devonport and Portsmouth.
The obvious UK read-across is Babcock, because it builds the Type 31 frigates at Rosyth and Jefferies is treating CCV as a possible Type 31 follow-on. But BAE Systems is also relevant in UK surface ships and manages Portsmouth.
It said Babcock should benefit from the commitment to nuclear deterrence and AUKUS-related infrastructure. Rolls-Royce makes nuclear propulsion systems/reactors, while BAE Systems builds the Astute and Dreadnought submarines.
Chemring could gain from plans for six new energetics facilities by 2030, while Cohort may see opportunities in sonar and naval countermeasures.
Jefferies also pointed to £490 million for directed energy weapons (possible benefit for Qinetiq, which is on the DragonFire laser programme with MBDA and Leonardo) and about £2 billion for the Digital Targeting Web.
10.57am: 'Indirect' US-Iran talks continue
Indirect talks between the US and Iran are continuing in Doha, according to a Reuters report, citing a senior Iranian official.
The talks, which began last night, are focused on the release of Iranian funds and the Strait of Hormuz, the official said.
Separately, market-monitoring accounts reported claims from senior Iranian sources that Tehran wants to retain control over Hormuz before discussing wider peace issues.
Those claims have not been independently confirmed, the reports said.
Recent disputes saw energy prices rise at the start of the week, raising worries about inflation and as a consequence, the path of interest rates.
10.42am: Manufacturing inflation worth watching
The strong UK manufacturing PMI performance is likely to "unwind" in the coming months, says Rob Wood at Pantheon Macroeconomics.
"Front-running by businesses ahead of expected price rises and supply chain disruptions began to unwind towards the end of June, according to the manufacturing PMI," he points out.
The output index of the final manufacturing PMI was revised down by a full point from the mid-month 'flash' release, and Wood says it is consistent with output from the sector rising by about 0.5% three-months-on-three-months, slightly below the latest ONS reading of 0.6% in April on the same basis.
"Looking ahead, we think the normalisation of activity has further to run, and so expect manufacturing output to rise only slowly over the rest of 2026."
The future output balance was marked down by a full point from the flash release, "suggesting a sharper revision to businesses’ pipelines of activity from firms responding later to the survey", with the new orders index now at a six-month low and backlogs of work falling at a faster pace in June than May.
The sector input price balance fell to 76.6, from 81.8, which Wood says is consistent with core producer output price inflation jumping to around 7.0% year-over-year, compared to the latest ONS reading of 2.3% in May, "so the MPC still needs to be wary of sticky inflation becoming embedded".
10.08am: FTSE up and down
The FTSE 100 is back in the red, after the first two hours of trading has seen the index struggle for direction, swinging between a loss of over 50 points to a gain of 10 then now back lower again.
Biggest fallers include bookmaker Entain, data supplier RELX, Primark owner ABF, Guinness maker Diageo and trainer seller JD Sports.
Among the index heavyweights, Shell, Rio Tinto, BP, BAT, National Grid and Compass are all down between 1% and 3%.
Oil prices are on the slide again, with Brent down 1.4% to $71.93 a barrel.
This reflects a "new twist with the US/Iran peace talks", says Russ Mould, investment director at AJ Bell, which has "caused ripples across the market as investors grow tired of non-stop setbacks".
Iran said it would not meet with visiting US envoys.
"Commodity producers weighed down the FTSE 100, although support from pharma and defence stocks helped stop the blue-chip index from falling," says Mould.
9.57am: Mixed UK manufacturing data
UK manufacturing output last month was weaker than expected, but still rose at the fastest rate since autumn 2024.
The S&P Global UK manufacturing purchasing managers' index fell to 52.5 from May's four-year high of 53.9, below the earlier flash estimate of 53.1. Anything above 50 signals growth.
Output growth was helped by customers building stocks to protect against supply disruption and expected price rises.
But new orders rose at the slowest pace since December 2025, suggesting that boost is already starting to fade.
Rob Dobson at S&P Global said: "Sustaining the upturn is becoming a bigger concern. Manufacturers are currently benefiting from client strategic stockpiling, as they safeguard against supply chain disruptions and expected price rises."
He said optimism in the sector about the year ahead "remains tepid", with many companies concerned about geopolitical tensions and uncertain over the future course of government policy.
On inflation, the survey found a mix of news, with input cost inflation remaining elevated as strained supply chains led to raw material shortages and higher charges; the recent drop in energy prices has helped reduce the overall rate of inflation, leading to a slowing in the rate of increase of factory selling prices.
9.16am: House prices flat on last month
UK house prices remained unchanged in June compared to the month before, according to Nationwide.
Prices rose 2.2% compared to a year ago, up from 1.7% in May.
South East outside of London remained the weakest performing region, with 0.1% annual rise.
"It is not surprising that the market has softened a little in recent months, given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices and market interest rates," says Robert Gardner, Nationwide's chief economist.
"Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May."
The US and Iran ceasefire, while fragile, has pushed down oil prices and reduced expectations that the Bank of England may have to raise interest rates, Gardner says.
"In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.
"If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters, providing that domestic political uncertainty does not adversely impact sentiment."
8.51am: Asos jumps
Asos shares have strutted 9.6% higher on the back of its Atlanta warehouse sale.
Analyst Anubhav Malhotra at Panmure Liberum says the two sales imply that the group’s net debt position (excluding leases) at the August year end "could be under £100 million", down from £294 million at the half year.
Free cash flow generation "should improve to over £35 million per annum" from next year, he adds, implying at least a 10% FCF yield on the current share price.
"While we remain concerned about ASOS’s market positioning and declining sales trends, particularly across international markets that account for around 50% of group revenue, the disposal of Atlanta fulfilment materially strengthens ASOS’s financial position and should further improve its ability to secure favourable refinancing terms ahead of the 11% coupon £253m Convertibles due in September 2028."
8.15am: FTSE 100 starts July in the red
The FTSE 100 fell over 50 points in initial trades, but has cut this deficit to 37 points now, at 10,460.
ABF is leading the fallers, down 3.2% after warning of larger losses from its sugar business.
JD Sports is next, falling 2.7% after results from major partner Nike overnight, which revealed continued struggles and flat revenue.
Miners are weighing too, led by precious metals pair Fresnillo and Endeavour, followed by Anglo American, Rio Tinto and Antofagasta.
7.59am: NatWest completes Evelyn deal
NatWest says it expects to lift fee income by about 20%, improve returns and increase its exposure to the UK wealth market after wrapping up its £2.7 billion acquisition of Evelyn Partners yesterday.
The FTSE 100 lender said the deal creates the UK’s biggest private banking and wealth management business, with £127 billion of assets under management and administration as of the end of last year.
As well as increasing fee income and the potential for further revenue benefits from combining the businesses, NatWest also expects annual cost savings of about £100 million, though it has to shell out one-off costs of about £150 million to deliver them.
7.44am: ABF warns on sugar losses
Associated British Foods has warned that weaker sugar trading will hit profits this year, while Primark saw mixed sales in the third quarter.
The FTSE 100 group's CEO George Weston says: "Aside from Sugar, our full year outlook for the group is unchanged."
Sugar is expected to make a larger adjusted operating loss of £25-60 million, which was blamed on lower European sugar prices, higher gas costs linked to the Middle East conflict, and uncertainty in Africa
Primark LFL sales shrank 2.2% in the 16 weeks to 20 June, though total sales were up 4% to £2.9 billion thanks to new stores and currency swings.
7.29am: Market analysis
Markets ended the second quarter "on a high note" thanks to more strong gains from US chip stocks, says market analyst Kathleen Brooks at XTB, though she says the speech from new Federal Reserve chief Kevin Warsh later will be "crucial for sentiment" in the third quarter.
"Since Tuesday’s trades will be settled on Wednesday, the price action [last night] could be a sign that there is still life in the AI trade even after the monster rally last quarter that added $2 trillion of value to Micron, Intel and AMD."
With the Dow Jones having its best first half of the year in six years, while the Nasdaq closed out its fourth best quarter ever, these moves "are unusual, so should we expect them to continue?" wonders Brooks.
"A lot will depend on how economic data evolves in the US, and earnings growth. If the hyeprscalers announce further larger capex spending when they report Q2 results later this month, the rally in semiconductors may continue."
Analysts expect AI infrastructure companies to contribute 60% of S&P 500 earnings growth this year, she notes.
"As always, a strong US economy has ramifications for the world. This week’s jobs data will be crucial information for traders."
"A robust labour market contradicts the narrative that AI is killing jobs, in fact, evidence is growing that US companies that are adopting AI heavily are growing their headcounts significantly.
"While lower level jobs are being reduced, there are more jobs focusing on higher value tasks that generate more revenue. This is likely to boost productivity in the US, especially if this trend persists."
As for Warsh, he has stated that he thinks a rebound in productivity will keep inflation low in the long term, though for now with US CPI running above 4%, he and the Fed are wary about inflation.
His speaking today at the ECB’s central bankers’ conference will be at 2pm BST in one of his first major international appearances as Fed chair.
"His remarks have the potential to move financial markets, and the content of his speech will be crucial for the direction of US interest rate expectations. Currently, there is an 80% chance of a rate hike this year," says Brooks.
FTSE 100 Live pre-open
Expectations for the FTSE 100 are negative as a new month and the second half of the year begin on Wednesday, with futures mixed for other markets as a raft of new economic data looms.
London's blue-chip index has been called 20 points lower, after it failed to hold onto over 120 points yesterday and by the close finished up less than 13 points at 10,497.12.
Overnight, Wall Street wrapped up its best quarter since 2020, with the Dow Jones adding another 0.3% on Friday to close at a fresh high above 52,300, while the Nasdaq jumped 1.5% and the S&P 500 climbed 0.8%.
The S&P 500 gained 15.2% in total return terms over the quarter, helped by the strongest performance from the Philly semiconductor index since it started in the early 1990s.
Asian markets are mixed this morning, with Korea's Kospi down 1.8% and the Hang Seng down 0.6%, while Japan's Nikkei has risen 0.7%, with Chinese and Indian benchmarks not far behind.
Jim Reid, strategist at Deutsche Bank says the mood turned after the market keyed in on strong US job openings numbers and hawkish comments from Cleveland Fed President Hammack shortly after their release.
"She said in a CNBC interview that the US may 'need higher interest rates to bring inflation back down to target', and when asked about a July hike, said she was keeping an open mind at every meeting.
"So that raised speculation about a rate hike in just four weeks’ time, and market pricing for a July hike ticked up a bit to 34% by the close, up from 32% the previous day."
This led to a fresh selloff for US Treasuries but a more muted reaction for European government bonds, but not UK gilts, which rose after Bank of England governor Andrew Bailey warned that inflation could still rise later this year.
Fed chief Kevin Warsh and ECB head honcho Christine Lagarde both speak at the Sintra conference today.
Later, many will be leaving work in time to watch England's first knockout game in the World Cup against DR Congo at 5pm London time.
