London close: Stocks end flat as sterling gains; tariffs in focus
By Michele Maatouk
Date: Wednesday 05 Mar 2025
(Sharecast News) - London stocks pared earlier gains to end flat on Wednesday, held back by strength in the pound, as investors hoped the US might offer Canada and Mexico a compromise on tariffs.
The FTSE 100 closed steady at 8,755.84, while sterling was up 0.5% against the dollar at 1.2864.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive their earnings from overseas.
Stocks had been trading up earlier in the session, with sentiment boosted after US Commerce Secretary Howard Lutnick said on Fox Business that the US might meet Canada and Mexico "in the middle" to "work something out" on tariffs.
There was also a Bloomberg report suggesting that the US is considering a month-long breather on new tariffs on Canadian and Mexican car imports.
Russ Mould, investment director at AJ Bell, said: "Investors are looking for any signs that Trump is open to deals rather than doling out tariffs and refusing to listen. US commerce secretary Howard Lutnick hinted we might soon see an amendment to the tariff structure that came into force this week.
"Markets would take even the slightest rollback from Trump as a positive sign, helping to settle nerves following concerns about a full-blown trade war."
The mood also lifted after Ukrainian President Volodymyr Zelensky said that his meeting with Trump last week was "regrettable" and that he was ready to negotiate peace.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Expectations have risen that US relations with Ukraine are warming up from the ice-cold intensity of Friday's Oval Office meeting between Trump, Vance and Zelensky.
"Trump brandished a letter from the Ukrainian President, in his address to Congress, which he said indicated Kyiv was ready to come to the negotiating table. The renewed willingness from Zelensky to sign a minerals deal has led to hopes that a way can be found out of a diplomatic quagmire, which has eased some geopolitics fears."
On home shores, a survey out earlier showed that job cutting across the service sector accelerated in February, as firms reacted to subdued demand and rising costs.
According to the latest S&P Global UK services PMI survey, the reduction in employment was the fastest since November 2020.
Respondents attributed the reduction in employment to weak demand, with a lack of new business to replace completed projects, and sharply increasing input costs.
Around one-third of respondents said they had seen their average cost burdens rise in February, largely through increased salary payments and suppliers passing on higher payroll costs.
Overall, the business activity index rose fractionally, to 51.0 from 50.8 in January. The reading has now remained above the neutral 50.0 threshold for sixteen consecutive months.
However, it is also well below the long-run series average of 54.3 and was marginally below consensus expectations of 51.1.
The UK composite PMI - a weighted average of the manufacturing output and services business activity indices - was 50.5, down from 50.6 and in line with expectations. A reading above 50.0 indicates growth, while one below it suggests contraction.
Tim Moore, economics director at S&P Global Market Intelligence, said: "UK service providers achieved another modest increase in overall business activity during February.
"However, there has been a clear loss of growth momentum since last autumn, and the survey's forward-looking indicators continue to suggest an elevated risk of stagflation on the horizon.
"Worries about the near-term economic outlook and the impact of rising payroll costs contributed to another slide in optimism.
"Employment has now decreased for five months in a row. Aside from the pandemic, this represents the longest period of falling employment since early 2011."
In equity markets, Chilean copper miner Antofagasta racked up strong gains.
Dan Coatsworth, investment analyst at AJ Bell, said: "Certain miners were red hot thanks to chatter that China has been stockpiling strategic metals ahead of tariffs.
"The big risk of China's actions is that it effectively brings forward commodity demand - great for miners' near-term earnings, but it could leave them short later in the year if China decides it can take its foot off the pedal with commodity purchases.
"It all depends on whether China is stockpiling to have a long-term strategic reserve or if this is just a quick shopping trip to fill the basket with product before it jumps in price."
Elsewhere, Games Workshop rallied as it lifted guidance for the full year, saying trading in January and February had been ahead of expectations, with strong trading across both the core business and licensing.
Barclays rose sharply after an upgrade to 'outperform' from 'neutral' by BNP Paribas Exane.
Breedon surged as it hailed record underlying full-year results and announced the acquisition of US construction materials and surfacing solutions business Lionmark for $238m (£187m) - a deal which is expected to more than double its US revenue.
Wealth management outfit Quilter jumped as it lifted its full-year dividend by 13% after a strong end to 2024, as the company reported double-digit profit growth and a big increase in assets under management and administration.
On the downside, Balfour Beatty slumped as the infrastructure group said Leo Quinn will step down from the board later this year after more than 10 years as chief executive.
Market Movers
FTSE 100 (UKX) 8,755.84 -0.04%
FTSE 250 (MCX) 20,127.73 0.89%
techMARK (TASX) 4,832.85 0.60%
FTSE 100 - Risers
CRH (CDI) (CRH) 7,790.00p 6.77%
Antofagasta (ANTO) 1,820.50p 6.46%
Fresnillo (FRES) 828.50p 6.22%
Melrose Industries (MRO) 680.00p 5.92%
Convatec Group (CTEC) 269.40p 5.81%
easyJet (EZJ) 504.80p 5.56%
Schroders (SDR) 384.00p 5.15%
Mondi (MNDI) 1,255.50p 4.93%
Anglo American (AAL) 2,408.00p 4.65%
Prudential (PRU) 746.40p 4.36%
FTSE 100 - Fallers
Severn Trent (SVT) 2,399.00p -4.50%
National Grid (NG.) 933.60p -3.95%
Haleon (HLN) 400.80p -3.40%
United Utilities Group (UU.) 944.40p -3.26%
Pearson (PSON) 1,335.50p -3.15%
Compass Group (CPG) 2,720.00p -2.96%
Land Securities Group (LAND) 536.50p -2.90%
Intertek Group (ITRK) 5,250.00p -2.51%
Tesco (TSCO) 379.00p -2.50%
British American Tobacco (BATS) 3,079.00p -2.44%
FTSE 250 - Risers
Wizz Air Holdings (WIZZ) 1,675.00p 15.20%
Aston Martin Lagonda Global Holdings (AML) 86.00p 14.29%
Breedon Group (BREE) 478.50p 11.93%
Hays (HAS) 74.50p 9.56%
Ocado Group (OCDO) 247.60p 9.51%
QinetiQ Group (QQ.) 493.60p 8.77%
Computacenter (CCC) 2,306.00p 8.36%
Ibstock (IBST) 164.80p 8.14%
Ferrexpo (FXPO) 76.10p 7.64%
Quilter (QLT) 161.00p 6.62%
FTSE 250 - Fallers
Wood Group (John) (WG.) 38.36p -6.29%
Greggs (GRG) 1,817.00p -4.57%
Diversified Energy Company (DEC) 956.00p -4.40%
Balfour Beatty (BBY) 438.00p -3.86%
Future (FUTR) 846.00p -3.75%
Tritax Big Box Reit (BBOX) 142.30p -3.59%
Pennon Group (PNN) 394.80p -3.28%
Keller Group (KLR) 1,348.00p -2.60%
Bakkavor Group (BAKK) 150.50p -2.27%
Workspace Group (WKP) 411.00p -2.26%
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