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London stocks dipped on Tuesday after reports suggested U.S. President-elect Donald Trump could pursue gradual tariff increases. The FTSE 100 underperformed, slipping 0.2%, as disappointing earnings from certain companies added pressure. Industrial metal miners gained 1.2% as copper and iron ore prices increased, while the aerospace and defense sector climbed 1.6% following a drop of more than 1.5% in the previous session. Broader European stocks rose, with analysts linking Tuesday's gains to a Bloomberg report indicating that members of Trump's incoming economic team are considering gradually increasing tariffs each month. Additionally, European equities were supported by a slight easing in yields on British government bonds, although they remained close to multi-year highs.

Single Stock Stories:

• Shares of JD Sports Fashion, a British sportswear retailer, have dropped nearly 13% to 84 pence, marking their lowest point since April 2020. The company is the biggest loser on the FTSE 100 index, which has decreased by 0.3%. JD Sports has revised its annual adjusted profit before tax forecast to between £915 million ($1.12 billion) and £935 million, down from the previous guidance range of £955 million to £1.035 billion. The company reported a 1.5% decline in like-for-like revenue for November and December. JD is avoiding indiscriminate price cuts and has maintained its margins, but like-for-like sales have been affected.The stock has plummeted approximately 40% in 2024.

• Shares of British American Tobacco (BAT) fell by 2.6% to 2,856p, positioning it among the biggest losers on the FTSE 100 index. This drop comes after Reinet Investments announced the sale of 43.3 million BAT shares at £28.20 each, generating gross proceeds of £1.2 million ($1.47 million). Nevertheless, BAT shares have increased by about 25% over the last year.

• Shares of Persimmon jumped by as much as 7.4% to 1,134.50p, positioning it as the leading percentage gainer on the FTSE 100 index. The British housebuilder revealed that its earnings for 2024 are anticipated to be at the higher end of market predictions, bolstered by enhanced sales and robust pricing performance. The company constructed 10,664 homes in 2024, marking a 7% increase and surpassing market expectations. Persimmon also reported an 8% increase in its forward sales position — a crucial industry metric for near-term demand — reaching £1.15 billion ($1.40 billion) by the end of the previous year. The firm observed a steady recovery in buyer demand throughout 2024, laying a strong groundwork for growth in 2025. This optimistic outlook also positively influenced its FTSE 100 counterparts, with Taylor Wimpey climbing 2.2%, Barratt Redrow increasing by 2.4%, and Vistry rising 2.4%.

Broker Updates:

• The UK began the year with a bond sell-off and a drop in the pound, yet many investors are still considering UK assets for future investment, according to a Morgan Stanley survey of 161 institutional investors. Nearly a third view recent events as a buying opportunity, while 44% are monitoring the situation, and only 19% plan to sell. The interest in buying is strongest among those already invested in UK assets. Additionally, 43% anticipate more Bank of England rate cuts than currently expected. Investors are looking for market stability or fiscal tightening announcements to encourage buying GBP or GBP-exposed assets. The survey indicates a balanced interest in UK stocks, banks, and real estate, with Morgan Stanley favoring Barclays and British Land as top picks.

Technical & Trade View

FTSE Bias: Bullish Above Bearish below 8225

• Primary support 8000

• Below 8000 opens 7855

• Primary objective 8600

• Daily VWAP Bearish

• Weekly VWAP Bullish

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