London's FTSE 100 rose 0.52% on Tuesday's close as investors assessed Britain's latest labor market data and the new government's plans to cut household electricity costs, while also monitoring reports that US President Donald Trump was preparing new tariffs after a temporary 10% global duty expires on Friday.
Prime Minister Andy Burnham, on his second day in office, said the UK government will scrap the 5% value-added tax on household electricity bills from Oct. 1 to help ease cost-of-living pressures. The emergency relief measure is expected to reduce the October price cap set by the UK's Office of Gas and Electricity Markets by 45 pounds sterling annually, on top of the 150 pounds removed in the last budget.
"This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode," said John Healey, who succeeded Rachel Reeves as chancellor of the exchequer on Monday.
Data from the Office for National Statistics showed that Britain's unemployment rate stood at 4.9% in the three months to May, matching the level in the prior three-month period and the consensus estimate. Meanwhile, average weekly pay, including bonuses, increased 4.3% year over year during the quarter to May, slower than the 4.4% jump earlier and the expected 4.5% growth.
"Overall, the labour market looks stable but weak," Berenberg said. "Wage growth remained on a firm downward trend. Private sector average weekly earnings growth excluding bonuses cooled from 3.0% 3m. yoy to 2.9% 3m. yoy, taking it even further below the 3.25% yoy pace that the Bank of England believes is consistent with 2% CPI inflation. With no need to worry about a new price-wage spiral, we expect the [Bank of England] to adopt a more dovish stance over the remainder of the year and resume interest rate cuts in December."
In corporate news, Compass Group's (CPG.L) organic revenue for the three months ended June 30 increased 7.1%. The group affirmed expectations for 7% organic revenue growth and 2% profit growth from mergers and acquisitions for fiscal 2026. The food services company's stock was down 2.28%.
"In line with consensus expectations for [organic sales growth] which had drifted down in recent weeks, with FY26 guidance maintained. Net new wins back into the 4-5% range in Q3, with [like-for-like] growth having moderated on lower inflation and unfavourable calendar timings in Sports & Leisure (S&L) despite a modest World Cup benefit," RBC Capital Markets said. "The stock has been the weakest of the three listed global caterers YTD and there is little in this statement that is likely to trigger a closing of the performance gap, in our view."
Meanwhile, London Stock Exchange Group (LSEG.L) plans to launch London Stock Exchange 24, or LSE 24, a new near-continuous trading venue that will operate Monday to Friday from 5 pm to 7:50 am London time, separately from the bourse's main market. Client testing will open by the end of 2026. LSEG ended the session 2.56% in the red.