The FTSE 100 eased back from record highs on Tuesday as events in the US and France dampened the mood, while retailers Associated British Foods and Kingfisher were hit by a broker downgrade.
The FTSE 100 index closed down 55.60 points, 0.6%, at 9,265.80.
The FTSE 250 ended 216 points lower, 1.0%, at 21,861.23 while the AIM All-Share finished 0.08 of a point higher at 765.11.
In New York, markets were mixed.
The Dow Jones Industrial Average fell 0.1%, the S&P 500 was little changed while the Nasdaq Composite firmed 0.2%.
Late on Monday, US President Donald Trump published a letter on his Truth Social platform announcing the removal of Federal Reserve governor Lisa Cook from her role, in an unprecedented move.
Mr Trump pointed to allegations of mortgage fraud in ousting Ms Cook, but she has pushed back saying that he had “no authority to do so”.
The case is likely to head to the courts, with a possibility that Ms Cook remains in her seat during this process.
Mr Trump’s latest move comes after months of criticism against the Fed, with the US leader calling repeatedly for interest rates to be slashed.
Last Friday, Fed chairman Jerome Powell struck a more dovish tone than expected, boosting hopes for a September interest rates cut in the US.
In a keenly awaited speech at the Jackson Hole economic symposium Mr Powell left the door open to a rate cut at the Fed’s September meeting, saying a “shifting” balance of economic risks “may warrant adjusting our policy stance”.
Morgan Stanley said: “It does not definitively say the Fed will cut in September, but it comes about as close as it can given the data between now and then.”
AJ Bell analyst Russ Mould said: “Even though Powell last week indicated a shift in Fed strategy with the implication that rates will be cut next month, Trump seems unsatisfied.
“He’s proceeded to sack Fed governor Lisa Cook which will drive speculation that the US president will push for a replacement governor more in line with his way of thinking.
“Cook has refused to resign, and the whole incident has caused financial markets to wobble once again.”
The yield on the US 10-year Treasury was at 4.28%, stretched from 4.26% on Friday. The yield on the US 30-year Treasury was 4.93%, widened from 4.87%.
The pound ebbed to 1.3483 dollars late on Tuesday afternoon in London, compared with 1.3539 dollars at the equities close on Friday. The euro fell to 1.1656 dollars, lower against 1.1726 dollars.
In Europe, the CAC 40 in Paris ended down 1.7%, while the DAX 40 in Frankfurt closed 0.5% lower.
In France, banking shares fell amid fresh political turmoil, with snap elections possible if the prime minister loses a key confidence vote.
Societe Generale, Credit Agricole and BNP Paribas SA fell 6.7%, 5.7% and 4.6%, respectively, and insurer AXA was 4.4% lower after prime minister Francois Bayrou on Monday said his embattled government will request a vote of confidence on September 8.
Mr Bayrou became prime minister in December after Michel Barnier’s government was ousted in a historic no-confidence vote in parliament.
Should Mr Bayrou lose the looming confidence vote, Berenberg analyst Salomon Fiedler believes snap elections would be the most likely outcome.
“He could ask Bayrou to stay on as head of a caretaker government. However, such a caretaker government would probably be rather limited in pursuing its political agenda. He could name a new prime minister. However, the new government would face the same parliament and the same fiscal problems, with no clear way out.”
Back in London, Bunzl rose 5.6% after as-expected results and reiterated guidance reassured investors that April’s profit warning was a “one and done”.
Karl Green, equity analyst at RBC Capital Markets, said: “Given broad concerns from investors that a second warning was more likely than not, today’s in-line H1 results, reaffirmed outlook and resumption of the share buyback programme should, we think, be relatively well received.”
In April, the London-based distribution and services company suspended its share buyback after lowering guidance amid weaker-than-expected trading.
On Tuesday, Bunzl said pre-tax profit declined 11% to £250.1 million in the six months that ended June 30 from £279.4 million a year prior.
Adjusted operating profit fell 11% to £404.5 million from £455.5 million a year ago, compared with Visible Alpha consensus of £405.3 million, with adjusted earnings per share of 77.8 pence, down 14% from 90.8p. Operating margin declined to 7.0% from 8.0%.
Revenue increased by 0.8% to £5.76 billion from £5.71 billion, or by 4.2% at constant currency, in a “challenging operating environment”.
Retailers Associated British Foods, Kingfisher and Wickes fell 4.0%, 4.3% and 8.6% respectively as Deutsche Bank took a more cautious view on UK consumer spending.
“The end of 2024 and early 2025 are likely to have been the sweet spot with real wage growth set to slow and fear of unemployment set to build from here,” the bank said in a research note.
Deutsche downgraded AB Foods, owner of fast fashion retailer Primark, and Wickes, a home improvement supplies merchant, to “sell” from “hold”. It lowered Kingfisher, also a DIY retailer, to “hold” from “buy”.
Another retailer on the move was JD Sports, up 0.8% ahead of Wednesday’s trading statement, while Prudential fell 2.3% ahead of its half-year numbers.
British American Tobacco fell 2.0% after it announced that Soraya Benchikh has resigned with immediate effect after a short stint.
The London-based cigarette and nicotine product maker said Ms Benchikh will support the transition until December 31. No reason was given for her sudden resignation.
Javed Iqbal, who is director of digital & information, will again act as an interim chief financial officer.
Ms Benchikh became the CFO from May 2024, taking over from Mr Iqbal, who had served as interim finance director between May 2023 and April 2024.
A barrel of Brent traded at 67.46 dollars late on Tuesday afternoon, down from 67.59 dollars on Friday. Gold advanced to 3,382.89 dollars an ounce against 3,375.22 dollars on Friday.
The biggest risers on the FTSE 100 were Bunzl, up 122 pence at 2,506p, Fresnillo, up 52p at 1,741p, BT Group, up 3.4p at 216.5p, Babcock International, up 15p at 1,015p and Rolls-Royce, up 14.5p at 1,057.5p.
The biggest fallers on the FTSE 100 were Kingfisher, down 12.2p at 269p, ConvaTec, down 9.8p at 232p, AB Foods, down 92 pence at 2,222p, DCC, down 168p at 4,672p and Diageo, down 61p at 2,060p.
The local corporate calendar has a trading statement from sports retailer JD Sports and half-year results from gold and silver miner Hochschild Mining.
The global economic calendar on Wednesday has an Australian CPI print overnight and consumer confidence data in Germany.
Contributed by Alliance News
