The FTSE 100 was down on Tuesday, with defence stocks weighing on the index as investors digested a raft of delayed US economic data.
London’s leading index was down 0.5% at 9,703 at the time of writing.
“Having moved within sight of the 10,000 mark a little over a month ago, the FTSE 100 lost momentum again today,” said AJ Bell investment director Russ Mould.
“There appears to be little sign of a Santa Rally as concerns about tech valuations continue to knock sentiment in US and Asian markets.
“The chances of an interest rate cut from the Bank of England this Thursday, already widely priced in by the market, looked to have ticked higher off the back of an increase in the UK unemployment rate.”
What hasn’t been priced in is the raft of US economic data withheld due to the US government shutdown. This backlog of US data started hitting the wires on Tuesday, with NFPs and retail sales data released. November Non-Farm Payrolls rose 64,000 compared to estimates of 50,000, while October saw 105,000 jobs lost, mainly due to government layoffs.
The initial reaction saw S&P futures rise, suggesting markets were preparing for more Fed interest rate cuts.
In the UK, defence stocks were among the top fallers as Ukraine peace talks progressed, curtailing interest in the sector. Babcock fell 4% while BAE Systems lost 2.5%.
BP shares were down 2% after the Financial Times reported Shell was unlikely to pursue a takeover of its peer after Shell’s head of mergers & acquisitions left amid a rift with the CEO.
“Reporting around the departure earlier this year of Shell’s M&A chief Greg Gut suggests he left having failed to convince senior management with a pitch for the company to buy BP,” Russ Mould said.
“If accurate, this would heavily hint that Shell is unlikely to return with a bid after the restrictions on its ability to do so expire on Boxing Day.
“Chief executive Wael Sawan was vocal in dismissing the prospect of a mega-merger between the two companies when rumours first emerged – suggesting he would rather use excess capital for share buybacks.”
JD Sports was the top riser as investors rotated into value stocks. JD Sports has had a tough time in 2025, but investors are gradually returning to the sports retailer.
The same can be said of ConvaTec, which is back among the gainers on Tuesday, up 2%.