UK stocks traded lower after a long weekend, with the FTSE 100 closing 0.29% in the red on Tuesday, as investors weighed renewed US-Iran fighting and a sharp pickup in UK shop price inflation.
Over the weekend, the US targeted the Islamic Revolutionary Guard Corps, triggering Iranian retaliatory strikes on the United Arab Emirates and Jordan. Iranian Foreign Minister Abbas Araghchi said the US must honor the terms of the Islamabad memorandum of understanding signed in June to resolve the military and economic crisis.
Meanwhile, a survey by the British Retail Consortium showed that the UK's shop price inflation climbed to an over two-year high of 1.5% year over year in August, from 0.9% a month ago. The consensus estimate for the month was 0.9%.
"The impact of higher energy, input and commodity costs is beginning to filter through into prices, particularly for ambient foods which are typically imported and processed. In non-food, electrical prices rose amid the ongoing AI boom, which is forcing up the price of memory chips and storage," said BRC Chief Executive Helen Dickinson. "The months ahead look challenging for households, with rising bills putting further pressure on budgets."
Separately, seasonally adjusted house prices in the UK were 0.2% higher on a monthly basis, against the revised 0.1% decline earlier and the expected 0.1% increase, according to data from the Nationwide Building Society.
In corporate news, Bunzl (BNZL.L), down 2.83%, upgraded its guidance to reflect a "modest" adjusted operating profit growth at constant exchange rates, while maintaining its expectation for revenue growth. The British distribution and outsourcing company reported higher year-over-year attributable profit and revenue for the first half.
"A decent beat at the EBIT level boosted in H1 by (unquantified) stock profits from higher product pricing in response to Iran-related input cost inflation with the FY margin outlook commensurately upgraded," RBC Capital Markets said. "The other key positive for sentiment is the new GBP500m buyback (~6% of market cap) as the group is below its target leverage range, though low M&A YTD puts pressure on the remaining 4 months of the year to deliver against the group's promise of a meaningful step-up in activity made at last year's M&A-focussed seminar."
AstraZeneca (AZN.L) gained 0.15% after finalizing its exclusive license agreement with Dizal Pharmaceutical Co. for Zegfrovy, an oral irreversible epidermal growth factor receptor inhibitor for patients with lung cancer. For an upfront payment of $600 million and additional payments of up to $900 million, AstraZeneca secured worldwide rights to develop and commercialize the drug.