London close: Stocks rise on US CPI, China trade deal

11th Jun 2025 17:11

(Sharecast News) - London stocks ended slightly higher on Wednesday as investors assessed a tentative trade truce between the US and China as well as crucial US inflation data, while chancellor Rachel Reeves' initial spending review also drew attention.

The FTSE 100 index rose 0.13% to close at 8,864.35 points, while the FTSE 250 added 0.18% to finish at 21,428.54 points.

In currency markets, sterling was last up 0.41% on the dollar to trade at $1.3555, while it dipped 0.15% against the euro, changing hands at €1.1798.

"Inflation remains MIA according to today's data, despite fears that tariff impacts would begin to show up in the figures," said IG chief market analyst Chris Beauchamp.

"US stocks were higher in the wake of the news, which helped to banish the US-China talks from everyone's minds.

"The talks ended today with no real change to the Geneva agreement, reinforcing the view that the whole tariff drama has been mostly performative."

Beauchamp said 55% tariffs on Chinese goods was "not to be sniffed at", noting that how much of that would be mitigated by "some fancy shipping footwork" remained to be seen.

"The Chancellor attempted to strike a much more upbeat tone in today's statement, though it's hard when there's so little to give away.

"She seems to have kept markets happy with pledges to invest in the economy, but this is another of those UK fiscal updates that illustrates how Britain is very much a prisoner of events beyond her control, like tariffs."

US inflation comes in below forecasts as Trump confirms China deal

In economic news, fresh US inflation data showed a smaller-than-expected increase in consumer prices in May, offering tentative relief to investors watching for signs of persistent price pressures.

Headline CPI rose just 0.1% month-on-month, below economists' forecasts of a 0.2% rise, though the index reached a record high of 321.47 points.

On an annual basis, inflation edged up to 2.4% from 2.3% in April, slightly under the projected 2.5%.

Core inflation, excluding food and energy, remained relatively firm at 2.8%.

Despite higher borrowing costs, US mortgage demand rebounded sharply last week.

Total mortgage applications surged 12.5%, with purchase activity up 10.3% and refinancing jumping 15.6%, according to the Mortgage Bankers Association.

The average 30-year fixed mortgage rate ticked up to 6.93%, its highest in weeks.

"Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month," said MBA deputy chief economist Joel Kan.

"Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets."

Trade relations between the US and China appeared to thaw as US president Donald Trump announced a "framework" deal had been reached, pending final approval by both governments.

The agreement reportedly includes mutual tariff arrangements and provisions for Chinese rare earth exports and student visas.

Trump described the deal as a "great WIN for both countries".

On home shores, UK Chancellor Rachel Reeves unveiled a wide-ranging spending review focused on infrastructure, housing, and healthcare.

The plan included a £39bn investment in social housing, an average 3% annual funding boost for the NHS, and a commitment to raise defence spending to 2.6% of GDP by 2027.

Reeves also announced additional support for apprenticeships and a major expansion of nuclear energy and carbon capture projects.

While she said the review would deliver national renewal, critics warned the scale of borrowing and limited funding for other departments risked future tax increases.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said markets reacted "calmly" to the review.

"The pound has flexed its muscles against the dollar, amid hopes for better growth prospects ahead," she noted.

"The FTSE 100 is hovering near a record high, while the domestically-focused FTSE 350 has gained ground.

"Housebuilders are among the biggest gainers today."

But Streeter said the Chancellor was "still walking a tightrope".

"The economy is hemmed in by slowing global growth due to tariffs, reducing the tax take.

"Defence spending is rising, borrowing costs remain elevated, and there's continuing political clamour for more concessions for vulnerable groups."

Asia-focussed shares and housebuilders in the green, Ibstock tumbles

On London's equity markets, Prudential rose 2.65% and Standard Chartered gained 1.18%, buoyed by optimism surrounding a US-China trade agreement.

Investors welcomed signs of easing tensions between the two economic powers, which could benefit firms with significant Asian exposure.

Housebuilders were also firmly higher after Chancellor Rachel Reeves confirmed a £39bn investment in social and affordable housing.

Vistry Group surged 5.96%, Crest Nicholson climbed 4.53%, and Bellway added 2.7%.

Gains were also seen in Persimmon, Barratt Redrow and Berkeley Group, as the sector responded positively to the planned funding boost.

Elsewhere, BT Group advanced 2.27% amid reports it was considering a takeover of struggling rival TalkTalk.

The Telegraph said the move could secure TalkTalk's 3.2 million customers and prevent broader disruption in the broadband market.

Assura gained 2.19% after agreeing to an increased final takeover offer from KKR and Stonepeak, valuing the healthcare property firm at £1.7bn.

Engineering group Weir also rose 1.45% after securing a £40m contract in Chile for a sustainable tailings project.

On the downside, Ibstock plunged 15.01% after issuing a profit warning.

The building products manufacturer said full-year adjusted EBITDA would fall short of analysts' expectations, prompting a sharp investor retreat.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,864.35 0.13%

FTSE 250 (MCX) 21,428.54 0.18%

techMARK (TASX) 5,103.10 1.10%

FTSE 100 - Risers

Fresnillo (FRES) 1,388.00p 3.58%

Flutter Entertainment (DI) (FLTR) 19,990.00p 2.70%

Prudential (PRU) 898.80p 2.63%

BT Group (BT.A) 180.80p 2.55%

British American Tobacco (BATS) 3,571.00p 2.03%

Games Workshop Group (GAW) 16,420.00p 1.67%

Rolls-Royce Holdings (RR.) 893.40p 1.52%

Weir Group (WEIR) 2,524.00p 1.45%

SSE (SSE) 1,797.50p 1.27%

Diploma (DPLM) 4,710.00p 1.20%

FTSE 100 - Fallers

Antofagasta (ANTO) 1,836.50p -2.55%

Anglo American (AAL) 2,143.00p -2.39%

JD Sports Fashion (JD.) 80.32p -1.98%

Marks & Spencer Group (MKS) 367.40p -1.61%

Unite Group (UTG) 841.00p -1.52%

Diageo (DGE) 1,968.00p -1.45%

easyJet (EZJ) 581.00p -1.16%

Associated British Foods (ABF) 2,028.00p -1.12%

Melrose Industries (MRO) 481.70p -0.97%

Bunzl (BNZL) 2,314.00p -0.94%

FTSE 250 - Risers

THG (THG) 25.36p 7.46%

W.A.G Payment Solutions (WPS) 81.80p 6.23%

Vistry Group (VTY) 693.00p 5.96%

Quilter (QLT) 165.30p 5.62%

Hochschild Mining (HOC) 245.20p 5.60%

Crest Nicholson Holdings (CRST) 188.90p 4.53%

Raspberry PI Holdings (RPI) 491.00p 3.81%

CMC Markets (CMCX) 261.00p 3.80%

Wizz Air Holdings (WIZZ) 1,225.00p 3.73%

SDCL Efficiency Income Trust (SEIT) 49.20p 3.36%

FTSE 250 - Fallers

Ibstock (IBST) 164.40p -15.63%

PRS Reit (The) (PRSR) 114.60p -3.54%

Dr. Martens (DOCS) 79.25p -2.22%

Hill and Smith (HILS) 1,720.00p -2.18%

Sirius Real Estate Ltd. (SRE) 95.10p -2.01%

Oxford Instruments (OXIG) 1,856.00p -2.01%

ITV (ITV) 79.25p -1.98%

Safestore Holdings (SAFE) 654.00p -1.95%

Breedon Group (BREE) 442.80p -1.95%

Energean (ENOG) 886.00p -1.94%