British Equities Close in Green; British American Tobacco Affirms Outlook
London's FTSE 100 ended Tuesday trading 0.33% higher as investors examined the latest economic data against the backdrop of fragile Middle East peace efforts.Net borrowing of consumer credit by individuals in the UK stood at 1.86 billion pounds sterling in April, little changed from the revised 1.9 billion pounds in March, according to Bank of England data. The consensus estimate for the month was 1.7 billion pounds. Meanwhile, net mortgage approvals for house purchases came in at 65,945, compared with the revised 63,979 in the prior month and the expected 62,000."UK bank lending growth shrugged off the rise in market interest rates during the first two months of the Iran war. Both corporate borrowing and mortgage lending remained robust in April, suggesting that higher fixed interest rates have so far failed to dampen demand much. If this continues, the Bank of England (BoE) will have to bear down on aggregate demand more forcefully by raising interest rates to ensure inflationary pressures do not spread," Berenberg said.Additionally, Deutsche Bank Research raised its full-year projection for British economic growth by 0.1 percentage point. "We have upgraded our 2026 [gross domestic product] outlook on the back of a slightly stronger Q1-26," economists said. "Indeed, we think the UK economy entered the Iran energy shock on a stronger footing. Stockpiling will also support activity as the lagged energy effects feed into inflation (and thus real disposable incomes). We remain cautious on the outlook from summer, as inflation bites into spending. Political uncertainty will also rear its head again, dampening investment and housing activity. Overall, we see GDP growth this year of 1% with activity rising to 1.2% next year and 1.6% in 2028."Speaking of the war, Tehran is reviewing a proposed temporary peace agreement with Washington after US President Donald Trump said discussions between the two sides are ongoing, Reuters reported, citing Iran's Mehr News Agency. Iran has not responded to a proposed final text of the deal, according to the report.In corporate news, British American Tobacco (BATS.L) upgraded its 2026 growth guidance for new categories, led by share gains for Velo nicotine pouches and Vuse vapors, keeping the overall group outlook unchanged. The stock sank 2.51% to become one of the worst performers on the blue-chip index."US vapour is the clear positive in today's print; however, weaker-than expected performance in [Asia-Pacific, the Middle East, and Africa] - driven by softness in Bangladesh and Heated Tobacco (ongoing destocking in Japan and high competition) - likely explains the absence of a guidance upgrade. We also believe management is opting to remain cautious at this stage, as elevated commodity prices are likely to weigh on consumer sentiment in 2H26 (Middle East). However, BAT flagged that there is no significant impact on Group's performance at this stage," BofA Global Research said, trimming its mid-term EPS estimates for the tobacco company.
