London close: Stocks mixed on China trade truce, US CPI reading
By Josh White
Date: Tuesday 12 Aug 2025
(Sharecast News) - London stocks ended Tuesday mixed as investors weighed a slowdown in US monthly consumer inflation against an extension of the trade truce between the US and China.
"Markets reacted with relief to news of an extension on the US-China trade deadline which was set to expire today," said AJ Bell investment director Russ Mould.
"However, this relief was measured given the market had largely anticipated such an outcome."
The FTSE 100 index rose 0.2% to close at 9,147.81 points, while the FTSE 250 slipped 0.21% to 21,842.69 points.
Patrick Munnelly, market strategy partner at TickMill, noted that "stocks increased as investor confidence rose after [US] president Donald Trump expressed openness to allowing US companies to resume some chip sales to China and prolonged a trade truce with Beijing," helping "alleviate market worries about escalating technology sanctions and possible supply-chain disruptions."
In currency markets, sterling strengthened 0.64% on the dollar to trade at $1.3518, while it eased 0.01% against the euro to change hands at €1.1563.
US inflation slows in July, UK unemployment stays high
In economic news, US consumer inflation slowed in July, with the Bureau of Labor Statistics reporting a 0.2% month-on-month rise in headline CPI, down from 0.3% in June.
Annual inflation held steady at 2.7%, though core CPI, excluding food and energy, rose 0.3% on the month, lifting the year-on-year rate to 3.1% from 2.9%.
Munnelly said that "an upside surprise in July's CPI data would highlight the disconnect between persistent price pressures and a softer labour market, complicating the September FOMC decision," adding that a milder headline rate versus core "reflects subdued energy prices but rising tariff-related goods costs."
Energy costs fell 1.1% in July, led by a 2.2% drop in gasoline, while food prices were flat.
The figures came ahead of the Federal Reserve's September policy meeting and amid political controversy after Donald Trump dismissed the BLS commissioner earlier this month.
On home shores, UK unemployment remained at a four-year high of 4.7% in the three months to June, while vacancies fell for a 37th consecutive period.
Job openings declined by 44,000 to 718,000 between May and July, with reductions across most industries.
Average earnings excluding bonuses held at 5%, while total pay growth slowed to 4.6%.
The number of payrolled employees dropped by 164,000 year-on-year in July.
"The latest UK jobs data suggesting a further softening in the labour market and recruiter PageGroup's latest numbers were of a piece with this downbeat backdrop," said Mould.
Munnelly observed that the ONS update was "unlikely to significantly shift market expectations regarding BoE policy," as pay growth was "tracking in line with expectations" and the data "suggests emerging slack in the labor market alongside pay growth moderation."
The Office for National Statistics said the data indicated a continued cooling in the labour market, with hospitality and retail seeing the largest losses.
UK retail sales meanwhile grew in July but failed to reverse sector challenges, according to the British Retail Consortium and KPMG.
Total sales rose 2.5% year-on-year, up from 0.5% in the same month last year, with food sales gaining 3.9% and non-food sales up 1.4%.
The BRC said rising food inflation boosted spending in early July, helped by warm weather and sporting events, but momentum faded later in the month.
In Germany, business sentiment weakened sharply in August, with the ZEW economic sentiment index falling to 34.7 from 52.7 in July.
Overnight, Australia's central bank cut its cash rate by 25 basis points to 3.6%, its lowest in two years, as inflation eased and labour market conditions softened.
Spirax surges on half-year results, Entain in the red
On London's equity markets, Spirax Group jumped 12.95% after its first-half results came in ahead of expectations.
Russ Mould said that "uneven operating and financial performance left the shares trading at multi-year lows ahead of today's first-half results," but the better-than-expected update "has largely wiped out this second-half weighting" that had concerned investors.
Housebuilder Bellway gained 1.64% after reporting a 14.3% increase in completions, both slightly above guidance.
According to Mould, Bellway "has belied some of the gloom around the sector" with higher completions and selling prices, though "profitability is not keeping pace with the improvement in revenue" as cost pressures linger.
Berkeley Group added 0.48% in a sector read-across.
On the downside, Entain fell 1.96% despite raising full-year guidance.
"Given the company's previous balance sheet issues, investors are likely to adopt a 'show me the money' mindset," Mould said, but he added that improving free cash flow and BetMGM's move into profitability are "garnering some credibility."
Recruiter PageGroup slipped 0.3% after posting a sharp drop in first-half profit as trading weakened in France and Germany.
Genuit Group dropped 4.27% after releasing results, while Derwent London slid 6.15% despite reporting resilient premium workspace demand.
Reporting by Josh White for Sharecast.com.
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