The FTSE 100 was trading in a holding pattern on Tuesday after positive UK jobs data helped fuel positive sentiment, but recent strength in the pound capped gains.
Much of the FTSE 100’s rally to all-time highs in the early weeks of 2025 can be attributed to a weakening pound and the support it provides for overseas earners. Now that the pound is strengthening, this support has morphed into a headwind which is weighing on the index.
“Strength in sterling is typically bad news for the UK’s flagship index because it hits the relative value of its constituents’ dominant overseas earnings,” said AJ Bell investment director Russ Mould.
From a macro perspective, investors will have one eye on the beginning of Trump’s effort to bring the Ukraine war to an end, which has so far had a positive impact on European stocks.
Antofagasta shares gained on Tuesday after the copper miner said it was working towards increasing production amid rising copper prices.
“‘Doctor Copper’ gets its nickname because the industrial metal’s many uses mean it can be a good guide to global economic health, so it is encouraging to see both the commodity and the share price of major producer Antofagasta start 2025 on an upward trend after last year’s dip,” Russ Mould explained.
Mould continued to explain how falling interest rates have provided support for the copper price and reignited interest in Antofagasta after a challenging 2025.
“The copper price slid in summer 2024, amid worries about China in particular, as the world’s second-biggest economy grappled with a real estate bust and a slowdown in growth. But interest rate cuts worldwide, and the application of fiscal and monetary stimulus by Beijing to try and boost growth, are helping the industrial metal build some price momentum in 2025, a trend which Antofagasta will welcome,” Mould said.
BT was the top faller, sinking 6%, on the news it had been downgraded by Citi.
Intercontinental Hotels shares fell 3% despite the group announcing a 7% increase in full-year revenue and 10% jump in operating profit. Shareholders were more concerned about the $110m splurge on the Ruby hotel brand, which operates 20 hotels across Germany, Switzerland and Austria.
“Intercontinental Hotels Group has beaten analyst expectations this morning, with its biggest region, the United States performing particularly well. China continues to lag but despite this the group is continuing to add units in the country,” said Adam Vettese, market analyst at eToro.
“Ordinarily this, alongside a new $900m buyback programme as well as a 10% dividend hike might have seen shares bid well, but they are slightly off this morning as investors digest the relatively chunky outlay for the acquisition of Ruby hotels. There also may be an element of profit taking in play as shares have soared over 40% since the beginning of last year. Shareholders will now hope IHG can deliver more of the same and keep the growth trajectory up.”