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London's FTSE 100 edged higher on Thursday, supported by optimism surrounding the U.S.-China trade deal and gains in heavyweight energy stocks. On Wednesday, U.S. President Donald Trump indicated he was open to extending the July 8 deadline for finalising trade negotiations with various countries, though he expressed confidence that it might not be necessary, as the U.S. expected to clarify the terms of the agreements within a week. This announcement followed renewed truce discussions with China. However, geopolitical tensions cast a shadow over markets as Trump withdrew personnel from the Middle East amid escalating conflicts with Iran. Despite this cautious backdrop, the FTSE 100 outperformed its peers, with major energy stocks rising 1.4%, led by Shell and BP, which significantly bolstered the index.

Meanwhile, the latest GDP data from the Office for National Statistics (ONS) revealed that the UK economy began Q2 on a weak footing. Economic activity contracted by 0.3% month-on-month in April, following a 0.2% rise in March, marking the first monthly decline in output since October 2024. The decline was attributed to a payback from Q1's robust 0.7% GDP growth, which had been driven by a surge in net exports and business investment ahead of U.S. tariffs. This reversal coincided with tax and national insurance increases, as well as higher domestic energy bills. April's GDP contraction was weaker than anticipated, undershooting Bloomberg’s consensus estimate of -0.1%’. The data reinforced expectations that Q1’s strong growth was unlikely to be replicated in Q2.

Single Stock Stories & Broker Updates:

• Tesco's shares increased by as much as 2.2%, reaching 393.8p, making it one of the top gainers on the FTSE 100 index. The largest food retailer in Britain reported a year-on-year growth of 5.1% in Q1 UK like-for-like (LFL) sales, with overall group LFL sales rising by 4.6%. The company reaffirmed its annual adjusted operating profit forecast, estimating it to be between 2.7 billion and 3 billion pounds ($3.66 billion to $4.06 billion). Tesco noted that the market is "intensely" competitive, and its CEO stated that there was no significant impact on sales in Q1 from the cyber issues affecting Marks and Spencer and Co-Op. Jefferies referred to the company's Q1 performance as "the finest start to the year." As of the last close, TSCO shares have risen by 4.6% this year.

• Shares of WH Smith increased by as much as 4.5% to 1,119p, reaching the highest level since March 4. The stock is one of the top gainers on the FTSE midcaps index. Activist investor Palliser Capital is reported to have acquired nearly a 5% stake in the British travel retail company, according to Sky News. The report indicates that the stake is valued at around 65 million pounds ($88.3 million) based on the current share price. Palliser had previously attempted to advocate for changes at Rio Tinto related to its dual-listing earlier this year. However, the stock has declined by approximately 7% so far this year.

• Halma has increased by 7% to reach a new high of 3,232p, becoming the top percentage gainer on the FTSE 100 index. The health and safety device manufacturer anticipates organic revenue growth in FY26 to be in the "upper single-digits," compared to estimates of a 6% increase, according to company estimates. They project an adjusted EBIT margin for FY26 to be slightly above the midpoint of their 19%-23% target range, fuelled by robust growth in the photonics sector. The adjusted profit before tax for the fiscal year jumped 16% year-over-year to 459.4 million pounds ($621.98 million), surpassing the consensus estimate of 447 million pounds. Year-to-date, HLMA has risen by 20.3%.

Technical & Trade View

FTSE Bias: Bullish Above Bearish below 8700

• Primary support 8500
• Below 8500 opens 8250
• Primary objective 8900
• Daily VWAP Bullish
• Weekly VWAP Bullish

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