The FTSE 100 was broadly flat on Tuesday as debt ceiling talks progressed, but economic data signalled slowdowns in major economies.
The FTSE 100 swung between gains and losses on Tuesday. The index opened lower before improving through the session to trade positively. The US open coincided with London’s leading index giving up gains to trade flat at the time of writing. The S&P 500 opened up down around 0.5% before buyers stepped in.
Helping improve sentiment, debt ceiling talks in the US were showing signs of progress.
“Experience tells investors that these stand-offs always end with a last-minute deal so the market is mostly taking this saga in its stride, particularly given commentary from both sides seems to be increasingly conciliatory,” said AJ Bell investment director Russ Mould.
“Just how close Washington must push for there to be a genuine fear of default is an open question, but right up to the eleventh hour, or in other words the end of this month, the expectation is likely to remain that a deal will be done.”
The FTSE 100 outperformed other major European indices after a string of poor economic data released on Tuesday hit stocks on the continent.
The German and US manufacturing sectors have contracted faster than expected, raising fears the global economy was starting to slow. Services data was better than expected and suggested there were still areas of strength in the economy.
FTSE 100 movers
RS Group was the FTSE 100’s top faller after the electronics company said they ‘are mindful of near-term external challenges.’ RS Group’s operating adjusted profit grew 18%, and its operating margin expanded in 2023, but investors were clearly more concerned about performance in the year to come.
RS Group was down over 7% at the time of writing.
The IMF raised its forecasts for UK growth on Tuesday and now thinks the UK will avoid a recession this year. However, it suggested that rates would remain higher for longer than many thought.
The impact this may have was evident in FTSE 100 consumer stocks which were among the top fallers.
B&M, Frasers Group, JD Sports and Next were all down on Tuesday. Housebuilders were also suffering.
The FTSE 100’s top risers were dominated by stocks with substantial dividend yield suggesting investors were seeking income-bearing assets that could compensate for any potential downside in stock prices.
British Land, Vodafone, British American Tobacco and Kingfisher were the top risers on Tuesday.
