Early market roundup: FTSE 100 shakes off Asia chip slump; Unilever up
London's FTSE 100 edged higher on Tuesday, building on Monday's solid gain, despite Asian stocks closing mostly lower amid chip sector concerns.
Meanwhile, the price of oil declined as tensions between the US and Iran appeared to ease.
The FTSE 100 index opened 19.57 points higher, 0.2%, at 10,801.32 on Tuesday. The FTSE 250 added 25.48 points, 0.1%, at 23,923.58, and the AIM all-share fell 2.08 points, 0.3%, at 769.61.
The Cboe UK 100 fell 0.1% at 1,073.27, the Cboe UK 250 added 0.2% at 20,885.20, and the Cboe small companies was 0.2% higher at 18,626.43.
In Frankfurt, the DAX 40 shot up 0.6%. The CAC 40 was flat.
In New York on Monday, the Dow Jones Industrial Average rose 0.5%, the S&P 500 ended flat, while the Nasdaq Composite fell 0.2% despite starting the day in the green.
Analysts at Deutsche Bank commented: "After rallying at the open on the retreat in oil prices, US equities whipsawed lower after chip stocks sold off."
The unease was felt in Asian trade also. The Nikkei 225 was down 4.0% on Tuesday in Tokyo. In China, the Shanghai Composite lost 1.2%. The Hang Seng Index in Hong Kong was up 0.3%. Sydney's S&P/ASX 200 added 0.6%. In Seoul, the Kospi shed 11%.
The falls came after The Information reported that an unnamed state-backed Chinese manufacturer has started producing domestically developed immersion deep ultraviolet lithography machines, a segment dominated by ASML. ASML had fallen 8.5% in Amsterdam on Monday. It was 0.5% lower in early trade on Tuesday.
Initial output is set to be limited, with roughly five machines this year and about 20 in 2027, with deliveries expected in 2026 to major domestic chipmakers.
Immersion DUV is the most advanced lithography category still accessible to Chinese firms after export curbs blocked extreme ultraviolet lithography systems; a domestic tool reportedly remains at the prototype stage.
The report noted the machines still trail on performance and reliability and require further testing before mass production.
Gold fell to USD4,048.85 an ounce early Tuesday from USD4,077.10 late Monday. Brent remained solidly below USD90 a barrel, slumping further to USD85.70 from USD89.71.
Iranian Foreign Minister Abbas Araghchi held separate phone calls on the Strait of Hormuz with his Omani and Saudi counterparts Badr Al-Busaidi and Faisal bin Farhan, state TV said Tuesday.
During the calls, "they stressed the need to strengthen cooperation and advance joint diplomatic efforts to establish stability in the region and eliminate the insecurity imposed on the Strait of Hormuz due to the aggressive actions of the US," the state broadcaster added.
Iran has maintained control over the strait since the start of the Middle East war on February 28, disrupting shipping through the vital conduit.
US President Donald Trump on Monday voiced optimism at the prospects for a negotiated peace deal with Iran, as the two sides held their fire for a third consecutive day.
But the US leader expressed hope that renewed diplomacy could bring an end to the war that began in late February with a wave of US-Israeli strikes, rattling both the region and the global economy.
"I have a lot of patience...We'll see what happens," he said aboard Air Force One. "I think there is a good chance that something could happen."
Sterling was largely flat at USD1.3303 on Tuesday from USD1.3305 at the time of the London equities close on Monday. Versus the euro it declined marginally to EUR1.1695 from EUR1.1698. The euro itself fell to USD1.1370 from USD1.1376. The dollar was up at JPY163.75 from JPY163.67.
The yield on the US 10-year Treasury narrowed to 4.62% early Tuesday from 4.65% late Monday afternoon. The yield on the US 30-year Treasury eased to 5.11% from 5.13%.
ING analyst Chris Turner commented: "Even though US rates are not moving much this week, it feels like the FX market is taking the possibility of a Fed hike tomorrow more seriously. The chances of that hike are now priced at nearly 40%. There are lots of credible opinions out there in favour of a hike, citing the benefits of an early Fed move to boost the Fed's inflation-fighting credentials and ultimately lessen the need for subsequent tightening. The Fed's lack of communication has certainly created fertile ground for such speculation.
"Overall, we doubt investors will want to let go of dollar balances ahead of tomorrow's Fed meeting. They will, however, be keeping their eyes on lower oil prices and also the sell-off in chip stocks as both Chinese competition in chip production and the circular nature of US hyper-scaler megadeals come under scrutiny."
The Federal Open Market Committee's meeting kicks off Tuesday before Wednesday's decision. The Bank of England's rate call is on Thursday, before the Bank of Japan on Friday.
IBOSS Chief Economist Rupert Thompson commented: "Recent UK news will, if anything, have eased the bank's inflation concerns. On the growth front, the news has also been quite encouraging with some signs of the UK consumer cheering up. UK business confidence also recovered in July – no doubt on misplaced hopes that tensions in the Middle East had eased - having dipped into recessionary territory the previous couple of months."
UK Prime Minister Andy Burnham has ruled out scrapping stamp duty after reports suggested he planned to get rid of the tax.
He told reporters that "won't be happening" during a visit to Portsmouth on Monday, but he did pledge to "make taxation fairer".
It comes after Burnham criticised the unfairness of the current council tax system, telling the BBC there are "big decisions ahead".
Downing Street dismissed suggestions the prime minister is actively considering removing council tax, saying they are "not true".
Stamp duty is paid on property sales from £125,000 upwards.
First-time buyers benefit from not having to pay any on purchases up to £300,000, however the relief ends at prices over £500,000.
Asked if he will change or scrap stamp duty in the next budget, Burnham told reporters: "That won't be happening. I don't know actually where some of the stories that have appeared over the last 24 hours have come from."
In London, Barclays fell 4.8% despite second-quarter group results that beat consensus. Second quarter pretax profit rose to £3.25 billion from £2.48 billion, with total income surging 16% to £8.34 billion from £7.19 billion.
Total income beat company-compiled consensus of £8.12 billion, with pretax profit beating a forecast of £3.12 billion.
Total income at Barclays UK rose 7% to £2.26 billion but was shy of consensus of £2.29 billion.
Analysts at Shore Capital Markets commented: "Barclays UK was slightly below consensus, while the US Consumer Bank underperformed (following a Q1 beat), albeit performance was distorted by portfolio disposals. Overall, strong wholesale banking performance more than offset softer consumer trends."
Unilever shot up 5.8% on a guidance hike. The consumer goods firm, behind brands such as Dove, Vaseline and Sure, now expects underlying sales growth for 2026 within its 4% to 6% multi-year guidance range, "with around 3% underlying volume growth".
It previously saw USG for the full year at the bottom end of the 4% to 6% range, with "at least 2% underlying volume growth".
Man Group rallied 5.6%. It reported record assets under management of USD253.6 billion at June 30, climbing from the USD227.6 billion recorded at the year end.
It hailed a positive investment performance of USD19.8 billion and net inflows of USD7.1 billion. Net inflows were "3.4% ahead of the industry".
"We delivered a strong first half, which demonstrates the evolution of Man Group; the exceptional net inflows and record AUM we are reporting today are the direct result of deliberate, multi-year investments in the diversification of our business. We are now seeing the benefits compound into broad-based growth," Chief Executive Officer Robyn Grew says.
Elsewhere, Essentra added 15%. The manufacturer and distributor of plastic-injection-moulded, vinyl-dip-moulded and metal components said half-year revenue shot up 9.0% to £166.1 million, with pretax profit more than doubling to £3.1 million from £1.3 million.
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