Late market roundup: FTSE100 ends higher ahead of key US readouts

London-listed stocks signalled a level of optimism at the end of Tuesday, closing higher with the price of oil down, in advance of US inflation data and Nvidia earnings on Wednesday.

The FTSE 100 index closed up 31.84 points, 0.3%, at 10,886.16. The FTSE 250 ended up 138.57 points, 0.6%, at 24,856.05, and the AIM All-Share closed up 1.44 points, 0.2%, at 815.48.

The Cboe UK 100 was up 0.3% at 1,082.22, the Cboe UK 250 was up 0.7% at 21,678.23, but the Cboe Small Companies fell 0.2% at 19,067.62.

Melrose took top spot on London's FTSE 100, soaring 10%, as it said it will not face a criminal investigation in relation to its Garden Grove site in California.

In addition, the Birmingham, England-based aerospace and defence company said it is targeting late September to resume manufacturing at the site after an overheating chemical tank forced a mass evacuation in May.

A claims programme will be launched to provide up to USD100 million for residents and businesses seeking damages, the FTSE 100 listing said.

Citigroup analyst Charles Armitage said although some civil fines are still possible, "we believe this largely quantifies the financial impact of the incident and materially reduces the risk for investors."

Across the pond, stocks were higher. The Dow Jones Industrial Average was up 0.1%, the S&P 500 index was 0.2% higher, while the Nasdaq Composite rose 0.4%.

Nvidia stood 1.1% to the good ahead of Wednesday's earnings which will be released after the Wall Street close.

Kathleen Brooks, research director at XTB said the market is starting "to price in the effects of a potential monster earnings report that restores faith in the AI trade."

"The most actively traded stocks in the US right now are all the major AI names, including Nvidia, Tesla, Micron and SanDisk. This adds to evidence that Nvidia's results will be a key driver of price action, and potential volatility later this week," she added.

In European equities on Tuesday, the CAC 40 in Paris closed down 0.2%.

But the DAX 40 in Frankfurt fared better and rose 0.7% after a report from the ifo Institute showed the business climate in Germany rose by more than expected in August.

The ifo business climate index for Germany climbed to 88.8 points in August from 86.7 points in July, the latter revised up from 86.6 points. It beat the FXStreet-cited market consensus of a lesser rise to 87.2 points in August.

The current situation index improved to 88.5 points in August from 86.5 points in July, ahead of the 87.0 points consensus.

"The larger-than-expected jump in today's ifo, driven by improved current conditions and expectations, reinforces the sense of cyclical lift and comes despite the renewed increases in energy prices," noted JPMorgan analyst Greg Fuzesi.

The pound traded at USD1.3632 on Tuesday afternoon, down from USD1.3639 at the equities close on Monday. Against the euro, sterling eased to EUR1.1683 from EUR1.1689.

The euro stood little changed at USD1.1671 against USD1.1669. Against the yen, the dollar was higher at JPY159.25, compared to JPY159.13.

The yield on the US 10-year Treasury narrowed to 4.65% on Tuesday from 4.70% on Monday. The yield on the US 30-year Treasury fell to 5.19% from 5.23%.

Elsewhere, lower oil prices provided some support to financial markets, as the price of Brent headed back below USD90, despite the announcement of a slew of new US sanctions on Iran.

Brent oil for October delivery traded at USD89.31 a barrel on Tuesday, down from USD92.74 late Monday.

David Morrison, senior market analyst at Trade Nation pointed to speculation of a "sudden, and unexpected, breakthrough in US-Iranian negotiations" as the reason behind the oil price falls.

"This followed reports that Field Marshall Asim Munir, Pakistan's Chief of the Army Staff, was returning to Tehran after talks yesterday with an offer to halt the US blockade and lift sanctions under the memorandum of understanding. Early days, and investors haven't got too carried away, but it's a good piece of news," he noted.

Back in London, Next rose 2.4% as Citigroup upgraded the stock to 'buy' from 'neutral'.

Citi analyst Monique Pollard believes Next should now command a higher valuation given its rapid international growth.

In a research note, Pollard noted Next's international segment has grown at a 20% plus five-year sales compound annual growth rate through 2025 and now makes up more than 20% of product revenue.

"With reducing exposure to the UK and superior growth, we believe Next now commands a higher multiple [versus] its own long-term average....as investors start to compare Next with a more global fashion retail peer set," Pollard wrote.

On the FTSE 250, Vistry surged 16% as it said it has secured a significant direct grant award as part of the UK government's £39 billion social and affordable homes programme.

The Kent, England-based housebuilder said the initial funding of £350 million, the largest award possible in the first allocation of funding, is significantly in excess of the first award received under the previous programme.

Russ Mould, investment director at AJ Bell said the award is a "major fillip" for Chief Executive Adam Daniels ahead of a crunch strategy day at the end of next month.

"Vistry is in the unenviable position of requiring a big second-half improvement to hit its full-year profit targets. This is often a recipe for a profit warning, something the business can ill afford given its credibility is already in tatters after a particularly bruising period," he noted.

The stock has had a volatile 12 months, falling 50% after a string of disappointing trading updates. Shares fell sharply earlier in August after reports credit insurer Allianz Trade plans to reduce the amount of cover that it provides to Vistry's suppliers.

In July, Vistry said it chief financial officer was stepping down and it forecast a first-half pretax loss of around £30 million.

CEO Daniels, who was promoted to chief executive in April, is leading an operational review of the group, the findings of which will be shared no later than interim results in September.

Jupiter Fund Management rose 4.3% as Berenberg started coverage of the stock with a 'buy' rating and a price target of 187p.

Berenberg said while there are "cheaper" asset managers, few "offer the combination of positive flows and a diverse product set."

But Smarter Web saw its shares slump 8.5% after it announced that Jesse Myers, head of bitcoin strategy, is leaving the company effective September 1.

The company said its bitcoin treasury policy will remained unchanged.

Gold traded at USD4,642.09 an ounce on Tuesday, down from USD4,670.28 on Monday.

The biggest risers on the FTSE 100 were Melrose Industries, up 48.20p at 510.20p, AstraZeneca, up 366.00p at 12,476.00p, Next, up 360.00p at 15,635.00p, Polar Capital Technology Trust, up 14.50p at 638.00p and International Consolidated Airlines, up 9.70p at 441.90p.

The biggest fallers on the FTSE 100 were Standard Chartered, down 55.00p at 2,140.00p, Diageo, down 35.50p at 1,735.50p, Compass, down 0.53p at 30.80p, British American Tobacco, down 61.00p at 4,133.00p and Smith & Nephew, down 14.00p at 1,068.00p.

Wednesday's global economic calendar has an inflation print in Australia overnight and US personal consumption expenditures and GDP data.

Wednesday's UK corporate calendar has half year results from Asia-focused insurer Prudential and a trading statement from lender S&U.

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