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UK stocks rose on Wednesday, driven by advances in chemical and metal mining companies, while investors also took comfort in U.S. President Donald Trump's decision to backtrack on his threats to dismiss Federal Reserve Chair Jerome Powell. The blue-chip FTSE 100 index had increased by circa 1% heading into the close. The optimism surrounding trade talks between the U.S. and China, who have been engaged in a growing tariff conflict, also boosted market sentiment after Trump indicated that a trade agreement could significantly reduce tariffs on Chinese products.

On the data front, there was an upside surprise in 2024-25; government borrowing leads to extra debt sales. The ONS reported a budget deficit of nearly £152bn for 2024-25, exceeding the OBR's recent forecast by £15bn. This highlights ongoing challenges in managing the UK's public finances. Initially, market attention post-Spring Statement focused on the OBR's economic optimism, but this report shows a significant shortfall even in the short term. Questions about the government's fiscal strategy will likely persist leading up to the autumn budget. The immediate concern is the increased borrowing requirement for 2025-26. The DMO has raised the financing remit, opting to issue an additional £5bn in tbills instead of gilts, considering current market volatility and evolving global trade conditions. Additionally, the gilt sales strategy has shifted to shorter maturities to ease pressure on the long-end of the curve amid changing demand and challenging trading conditions post-Liberation Day.

Single Stock Stories & Broker Updates:

• Shares of BP rose 5.8%, marking its largest one-day gain since February 10, coinciding with activist investor Elliott increasing its stake to over 5% via derivative contracts. Elliott, now the second-largest shareholder, aims for BP to boost free cash flow to $20 billion by 2027. So far, BP has fallen about 9% this year.
• Babcock's shares rose 6% as it projects FY25 operating profit to increase by 17% to 363 mln pounds, exceeding estimates of 346.8 mln pounds. The company's contracted backlog reached 10.1 bln pounds as of March 31, up from 9.5 bln pounds in September. BAB shares have gained about 50% this year.
• Shares of Reckitt fell 5.3% after reporting Q1 like-for-like net sales growth of 1.1%, below analyst expectations of 1.4%. The company maintained FY net sales growth expectations of 2%-4% despite a challenging macroeconomic outlook. Sales volumes in Europe and North America declined by 4.7% and 1.8%, respectively. Reckitt stated that tariffs would have an immaterial impact on costs, which they could mitigate. RKT is up about 2% year-to-date.
• Shares of Croda International rose 9.23%, making it the top gainer on the FTSE 100, which is up 1.64%. The company reported 8% growth in Q1 group sales at £442 million, surpassing Jefferies' estimate of £417 million. Croda is evaluating the effects of U.S. trade tariffs and plans to implement a surcharge for added costs. Q1 PBT aligns with expectations, and the FY2025 PBT outlook remains at £265-295 million. Prior to Tuesday, the stock had declined 18.76% this year.
• Hochschild Mining drops 16.9%, marking the largest intraday loss since January 22. Q1 production reached 79,941 gold equivalent ounces, falling short of Barclays' 92,000 and Peel Hunt's 85,000 estimates. Heavy rains at the Mara Rosa mine in Brazil impacted production. The company maintains its 2025 forecast of 350,000-378,000 ounces. Year-to-date, HOCM is down 23.5%.
• Shares of Hollywood Bowl Group rose 4.9%, their highest since February 19, making it a top gainer on the FTSE 250, which is up 1.2%. The company reported H1 group revenue of £129.2 mln ($171.9 mln), up 8.4% YoY, with UK revenue up 4.7% to £108.2 mln. Tariff changes announced in April will have no material impact on costs. Peel Hunt analysts believe BOWL is well-placed for forecast upgrades by year-end. The stock is up 3.2%, reducing YTD losses to 7.5%.

Technical & Trade View

FTSE Bias: Bullish Above Bearish below 7600

• Primary support 7500
• Below 7400 opens 6850
• Primary objective 8500
• Daily VWAP Bullish
• Weekly VWAP Bullish

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