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Stocks and Investing
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Stocks and Investing
Source : (remove) : Bloomberg L.P.
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FTSE 100 Live: UK Stocks Poised to Snap Six-Day Winning Streak

UK Markets in Flux: FTSE 100 Dips Amid Retail Slump, Pound Volatility, and Looming Trade Tensions

London, July 25, 2025 – The FTSE 100 index opened lower today, shedding 0.5% in early trading as investors grappled with disappointing retail sales data and escalating concerns over global trade tariffs. The benchmark index, which tracks the UK's largest companies, was dragged down by weakness in consumer-facing sectors, reflecting broader economic anxieties in the post-Brexit landscape. As of 9:30 a.m. BST, the FTSE stood at 8,150 points, with retail giants like Marks & Spencer and Tesco leading the declines, each dropping more than 2%. This comes on the heels of a volatile week where markets have been buffeted by currency fluctuations and geopolitical headlines.

The day's drama kicked off with the release of June's retail sales figures from the Office for National Statistics (ONS). Sales volumes fell by 1.2% month-on-month, far worse than the 0.4% decline economists had forecasted in a Bloomberg survey. This marks the sharpest drop since April, underscoring the strain on British consumers amid persistent inflation and rising energy costs. Non-food sales were hit hardest, plummeting 2.1%, while food sales managed a modest 0.3% uptick, buoyed perhaps by summer barbecues and outdoor gatherings. Analysts point to a combination of factors: wet weather deterring high-street footfall, the ongoing cost-of-living squeeze, and a shift toward online shopping that hasn't fully compensated for physical store losses.

"These numbers paint a grim picture of consumer confidence," said Sarah Jenkins, chief economist at Barclays. "With household budgets stretched thin, we're seeing a pullback in discretionary spending. This could force the Bank of England to rethink its interest rate strategy, potentially delaying any cuts that markets have been pricing in." Indeed, the retail data has fueled speculation about monetary policy. The BOE's next meeting is just weeks away, and traders are now betting on a hold at the current 5.25% base rate, rather than the quarter-point reduction some had anticipated.

Compounding the domestic woes is the pound's erratic performance against the dollar. GBP/USD traded at 1.2850 in morning sessions, down 0.3% from yesterday's close, as the greenback strengthened on robust U.S. economic indicators. The dollar's rally was spurred by stronger-than-expected U.S. GDP growth of 2.8% in the second quarter, released late yesterday, which bolstered expectations for a resilient Federal Reserve stance. Sterling has been under pressure all week, having lost nearly 1% against the euro as well, amid fears that the UK's economic slowdown could widen the growth gap with its trading partners.

Trade tensions are adding another layer of uncertainty. Reports emerged overnight that the U.S. administration is considering new tariffs on European imports, including key UK exports like automobiles and pharmaceuticals. This stems from ongoing disputes over subsidies and trade imbalances, with echoes of the Trump-era trade wars. UK Trade Secretary Jonathan Reynolds responded in a statement, warning that such measures could "severely disrupt bilateral relations and harm mutual economic interests." The prospect of tariffs has particularly rattled sectors like manufacturing and aerospace, with shares in Rolls-Royce and BAE Systems slipping 1.5% each. Investors are closely watching developments in Washington, where bipartisan support for protectionist policies appears to be growing ahead of the November elections.

Globally, the mood is mixed. Asian markets closed mostly higher, with the Nikkei 225 up 0.8% on tech gains, while European indices like the DAX and CAC 40 mirrored London's caution, each down around 0.4%. Wall Street futures point to a flat open, as traders digest corporate earnings from tech behemoths like Alphabet and Microsoft, which reported solid results but flagged concerns over AI investment costs. In commodities, Brent crude oil hovered at $82 per barrel, supported by Middle East tensions but capped by demand worries from China's sluggish recovery.

Diving deeper into the FTSE movers, energy stocks provided some counterbalance to the retail rout. BP and Shell gained 0.7% and 0.9% respectively, benefiting from stable oil prices and positive analyst upgrades. Mining heavyweights like Rio Tinto and Glencore also edged higher, up 1.2% amid a rebound in copper prices driven by hopes for stimulus in China. On the downside, banking shares wobbled; Barclays itself fell 1.8% after its half-year results showed a dip in net interest margins due to competitive mortgage lending.

Currency traders are eyeing the GBP/USD pair with particular interest. The pound's slide today reverses some of the gains made earlier in the month when hotter-than-expected UK inflation data had briefly supported sterling. At 4.1% year-on-year in June, core inflation remains stubbornly above the BOE's 2% target, but today's retail figures suggest underlying weakness that could temper hawkish bets. "The pound is caught in a tug-of-war," noted forex strategist Michael Hargreaves at HSBC. "On one hand, sticky inflation argues for higher rates; on the other, softening consumer data points to economic fragility. We're likely to see continued volatility until the BOE provides clarity."

Trade issues aren't limited to U.S. tariffs. The UK's ongoing negotiations with the EU over Northern Ireland protocols and fishing rights continue to simmer, with potential implications for cross-Channel trade. A report from the Institute for Fiscal Studies highlighted that post-Brexit border frictions have already cost UK exporters £7 billion annually, and any escalation in global tariffs could exacerbate this. Businesses are lobbying for government intervention, with the Confederation of British Industry calling for "swift diplomatic efforts to safeguard supply chains."

Looking ahead, the market calendar is packed. U.S. personal consumption expenditures (PCE) inflation data, the Fed's preferred gauge, is due later today, which could influence dollar strength and, by extension, sterling. In the UK, attention turns to next week's manufacturing PMI and consumer confidence surveys, which will offer further insights into the economy's health. Analysts at Goldman Sachs forecast a modest FTSE rebound by month-end, targeting 8,300 points, but warn that persistent trade headwinds could cap upside.

Investor sentiment, as gauged by the VIX equivalent for UK markets, remains elevated at 18, signaling above-average fear. Hedge funds are positioning for downside protection, with increased put options on FTSE futures. Yet, some see opportunity in the dip. "Volatility creates buying chances," said portfolio manager Emma Thompson at BlackRock. "Undervalued stocks in defensive sectors like utilities and healthcare could shine if the slowdown persists."

As midday approaches, the FTSE has pared some losses, now down just 0.3% at 8,170. Retail sales data continues to dominate discussions, with economists debating whether this is a blip or the start of a deeper downturn. The pound has stabilized slightly at 1.2865 against the dollar, but traders remain on edge for U.S. data releases.

In summary, today's market movements encapsulate the multifaceted challenges facing the UK economy: a faltering consumer base, currency pressures, and external trade threats. While energy and mining provide pockets of resilience, the broader narrative is one of caution. Investors will be watching closely for policy signals from Threadneedle Street and beyond, as the interplay of domestic data and global events shapes the path forward. With the summer trading lull potentially amplifying reactions, the coming days could see heightened swings in UK assets. (Word count: 1,048)

Read the Full Bloomberg L.P. Article at:
[ https://www.bloomberg.com/news/live-blog/2025-07-25/ftse-100-live-retail-sales-pound-usd-gbp-tariffs-trade-what-s-moving-uk-markets-right-now-markets-today-mdiedram ]