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Britain's primary indexes declined on Tuesday, weighed down by mining and financial shares, as investors grew wary of the uncertain U.S. trade policies, which affected market sentiment. The Organisation for Economic Cooperation and Development (OECD) has revised its global growth forecast downward, indicating that the trade conflict is having a more significant impact on the U.S. economy than previously thought. The Paris-based organisation also called on the British government to take more decisive actions to reduce borrowing and debt, just days before Finance Minister Rachel Reeves is set to unveil her long-term spending proposals. Investors were already on edge following U.S. President Donald Trump's announcement on Friday to raise tariffs on imported steel and aluminium from 25% to 50%. Industrial metal miners were hit hardest by the trade concerns, with shares declining by 2.5%, as London copper prices fell amidst worries about potential U.S. tariffs on the metal. Losses in financial stocks further affected both indexes, with an index measuring UK banks declining by 1.4%. Conversely, the aerospace and defence sub-index has continued to rise for the second straight day after Prime Minister Keir Starmer revealed a £15 billion ($20.3 billion) spending plan on Monday aimed at enhancing Britain’s "war-fighting readiness".

Single Stock Stories & Broker Updates:

• Shares of Rockhopper Exploration fell 10.3% to 46.8p after Italy annulled a €190 million arbitration award related to the Energy Charter Treaty, meaning the company will not receive the tranche 2 payment from the 2023 monetisation agreement. The company’s balance sheet remains solid with tranche 1 payment received and plans to claim a €31 million payout under an insurance policy. Including recent gains, the stock is up approximately 78%.

• Shares of Pennon Group fell 2.69% to 490.8p, marking it as a top loser on the FTSE 250 index. The company reported an adjusted loss before tax of £35.1 million for 2024-25, down from a profit of £16.8 million in 2023-24, but expects to be profitable by 2025-26. The 2024-25 results align with expectations, and shares are up 6.03% YTD.

• Shares of the UK's defence sub-index rose 1.5% to an all-time high of 17,923.6 pence, bolstered by the UK government's pledge for the largest rise in defence spending since the Cold War and an expansion of attack submarines. BAE Systems hit a record high (+2.1%), Rolls Royce rose nearly 1%, Babcock increased by 1.8% to an 8-1/2-year high, and Chemring gained 6%. The sub-index is up 55.5% this year.

• GSK's shares fell 1.2% to 1,492p after Berenberg downgraded its rating to "hold" from "buy" while maintaining a price target of 1,600p. The brokerage noted GSK is trading 30% below the value of its marketed drugs, but strong upcoming product rollouts may attract investor interest. Concerns remain about the impact of President Trump's drug pricing policies. Berenberg recommends Sanofi over GSK for value investors. GSK is up 11.1% YTD, while Sanofi is down 7.9%.

• Kier Group shares rise 3.6% to 174.4 pence, their highest since June 2019, despite the FTSE mid-cap index declining 0.3%. The company has increased its operating profit margin target to 4.0%-4.5% in 3-5 years, up from 3.5%. The order book stands at ~£11 billion, up about 2% from year-end, with the stock up 17.5% year-to-date.

• Shares of MJ Gleeson fell 26.4% to 380p, making it the top loser in the FTSE small-cap index, on track for its largest daily percentage drop. The company anticipates a 15-20% lower annual operating profit for Gleeson Homes due to increased costs and a failed land deal in East Yorkshire. They noted that the housing market recovery hasn't been strong enough to counteract margin pressures, and planning delays may further impact margins into FY26. GLEG stock has declined about 21% YTD, including today's drop.

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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