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FTSE 100 dips as BP and Shell fall amid oil slide
The FTSE 100 fell on Tuesday, weighed down by falls in defence and oil stocks, and after mixed economic data in the UK and US.
“A sell-off in the oil market served to pull down the FTSE 100, exacerbated by profit taking in defence contractors,” said Dan Coatsworth, head of markets at AJ Bell.
“Driving the declines was speculation that the Russia-Ukraine war could be near to a resolution. While that would be positive after nearly four years of fighting, it has negative consequences for the oil and defence sectors.”
The FTSE 100 index closed down 66.52 points, 0.7%, at 9,684.79. The FTSE 250 ended just 8.18 points lower at 22,040.98, and the AIM All-Share ended up by just 0.18 of a point at 749.41.
In Europe on Tuesday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended 0.6% lower.
In London, economic data pointed to a pick-up in business activity post the Budget, and a cooling in wage growth, plus a further softening in the labour market.
Figures from the Office for National Statistics on Tuesday showed the unemployment rate rose to 5.1% in the three months to October, up from 5.0% in the three months to September.
The jobless figure came in line with the FXStreet-cited market consensus and is the highest level since 2021, as the country emerged from the Covid-19 pandemic.
The increase in people out of work in the UK came alongside a decline in employment and a moderation in earnings growth.
Analysts at ING said the UK labour market is now cooling quickly enough to make it less of an inflation outlier.
ING’s James Smith said: “Wage growth is losing steam as the broader job market continues to cool.”
He noted that private sector pay is now rising by 3.9% annually, slowing from close to 6% at the start of the year.
“Those annual growth rates should steadily move lower over the coming months,” Mr Smith said, adding that “a rate cut on Thursday is highly likely, and we expect two further moves in the first half of 2026.”
A separate report showed the UK’s private sector performed better than anticipated in December.
The flash UK purchasing managers’ composite output index rose to 52.1 points in December from 51.2 in November, outperforming FXStreet-cited expectations of a milder increase to 51.4 in December.
The flash services business activity index climbed to 52.1 in December from 51.3 in November, beating the consensus of 51.5 for December.
Rob Wood, at Pantheon Macroeconomics, said the improvement came as businesses finally put a “chaotic few months of Budget speculation behind them” and looked towards the year ahead with greater policy certainty.
The pound was quoted higher at 1.3429 dollars at the time of the London equities close on Tuesday, compared with 1.3390 dollars on Monday.
The euro stood at 1.1775 dollars, up against 1.1764 dollars. Against the yen, the dollar was trading lower at 154.79 yen compared with 155.24 yen.
Stocks in New York were lower at the time of the London equity close on Tuesday.
The Dow Jones Industrial Average was down 0.5%, as was the S&P 500 index, while the Nasdaq Composite was down 0.4%.
The yield on the US 10-year Treasury was quoted at 4.17%, unchanged from Monday. The yield on the US 30-year Treasury was at 4.83%, also flat compared with Monday.
Data from the Bureau of Labour Statistics (BLS) showed US nonfarm payroll employment rose 64,000 in November, beating the FXStreet-cited consensus of 50,000.
However, in October, nonfarm payrolls dropped by 105,000, compared with expectations for a 25,000 decline, while September and August’s totals were revised down by a combined 33,000.
Federal government employment declined by 6,000 in November, following a loss of 162,000 in October.
The BLS data showed the unemployment rate climbed to 4.6% in November, the highest level since September 2021, above FXStreet-cited expectations of 4.4% and up from 4.2% a year earlier.
Wells Fargo said the US labour market remains in “a precarious position”.
The three-month average pace of job growth is now just 22,000 through November, compared with 62,000 heading into the report, the broker noted, while the unemployment rate rose to 4.6%, marking a new high since the end of the pandemic.
Back in London, oil majors BP and Shell fell by 3.4% and 2.7% respectively, while defence stocks Babcock International and BAE Systems declined by 3.6% and 1.7% respectively.
Brent oil was quoted at 59.01 dollars a barrel at the time of the London equities close on Tuesday, down from 60.39 dollars late Monday as hopes grow of a peace deal between Ukraine and Russia.
“The prospect of an end to the war in Ukraine and continued strong production from Opec+ is also weighing on prices. Even though US growth has been upgraded for 2026, this is not filtering through to a stronger oil price,” said Kathleen Brooks at XTB.
“Until we get a clearer demand picture or supply restraint from Opec+, it is hard to see how the oil price will recover.”
On the FTSE 250, trading platform IG rose 8.5% after extending its share buyback amid encouraging trading. Goodwin, meanwhile, slumped 11% despite reporting pre-tax profit more than doubled in the half-year to the end of October.
Elsewhere, four large London-listed growth stock investment trusts said their net asset values got a boost from a raised valuation for Elon Musk’s Space Exploration Technologies.
Scottish Mortgage Investment Trust, a FTSE 100 index constituent, together with FTSE 250 constituents Edinburgh Worldwide Investment Trust and Baillie Gifford US Growth Trust, as well as Schiehallion Fund, said a trigger event has required an upwards adjustment in the valuation of their holdings in SpaceX.
SpaceX is moving ahead with plans for an initial public offering that would seek to raise significantly more than 30 billion dollars, in a transaction that would make it the biggest listing of all time, Bloomberg reported on Tuesday last week.
Scottish Mortgage said the new valuation for SpaceX raised its NAV per share to 1,297.23 pence on Monday from the 1,205.12p it had reported for Friday last week. SpaceX now makes up 15.3% of its portfolio by value, up from 8.2% at the end of November.
Scottish Mortgage shares were up 0.9%, Edinburgh Worldwide was up 2.6%, Baillie Gifford US Growth was up 1.2% and Schiehallion Fund was up 1.5%.
Gold was quoted at 4,304.60 dollars an ounce on Tuesday, higher against 4,296.68 dollars.
The biggest risers on the FTSE 100 were easyJet, up 15.90 pence at 512.80p, Endeavour Mining, up 106.00p at 3,708.00p, JD Sports Fashion, up 2.14p at 83.18p, Fresnillo, up 68.00p at 2,924.00p and Convatec, up 4.80p at 234.80p.
The biggest fallers on the FTSE 100 were Babcock International, down 45.00p at 1,214.00p, BP, down 14.95p at 422.50p, Informa, down 27.00p at 864.00p, Shell, down 72.00p at 2,626.50p and Polar Capital Technology Trust, down 11.00p at 450.50p.
Wednesday’s economic calendar has UK inflation data and producer price inflation figures.
Wednesday’s UK corporate calendar has a trading statement from Serco.
– Contributed by Alliance News
“Overall, UK politics is a mess, there are already signs that foreign buyers are ditching the gilt market. If there is a major rout in the pound and/or gilts in the coming days, prospective candidates may need to assess whether now was a wise time to make a move against the PM,” she said.
A hallmark of President Trump’s second term has been his penchant for negotiating economic deals with countries that pledge to invest trillions of dollars in the United States
“It’s now pouring in from all parts of the world,” Mr. Trump said during a speech last fall in which he boasted of nearly $20 trillion of foreign investment.
The meetings this week between Mr. Trump and China’s leader, Xi Jinping, in Beijing are expected to include talks over purchases of American farm products and planes and the possibility of expanding access for American companies into China’s vast consumer market.
There has also been speculation that Mr. Trump and his advisers are seeking a major investment from China. But such a pledge could be complicated by deep distrust in the United States toward Chinese firms, which many workers blame for the hollowing out of American manufacturing.
Treasury Secretary Scott Bessent acknowledged the challenge in an interview on CNBC on Thursday, explaining that the United States and China were working to develop an investment board that would determine what sectors were acceptable for Chinese investment. That would essentially provide China with guidance on how to invest in the United States without its transactions being blocked by the Committee on Foreign Investment, an interagency group that reviews foreign investment and is led by Mr. Bessent.
“Look, there are plenty of things that the Chinese could invest in in the U.S.,” said Mr. Bessent, who is in Beijing with Mr. Trump.
Chinese investment in the United States has declined sharply in recent years amid tougher investment screening standards nationally and at the state level.
That sentiment could ultimately clash with Mr. Trump’s transactional instincts and his desire to return home with a big-ticket win.
“If Trump were to be committed to a major investment deal with China, there’s still a challenge of implementation,” said Kyle Jaros, an expert on U.S.-China ties at the University of Notre Dame. “It would take real follow-through to overcome a lot of the political and regulatory barriers that are in place right now.”
According to a report published last month by the research firm Rhodium Group, less than $3 billion of Chinese investment in the United States was announced in 2025. That was the lowest on record, with investment peaking at around $45 billion in 2016.
The United States has imposed tight restrictions on Chinese investment out of national security concerns, making it difficult for Chinese firms to build factories near military facilities. Some states also have enacted restrictions on Chinese purchases of real estate and farmland.
China’s clean energy technology, such as electric vehicles and batteries, has also faced challenges in the United States because of political backlash. There was a surge of Chinese investment in those sectors after clean energy and tax legislation was passed under the Biden administration in 2022, but according to Rhodium, more than half of those investments have been canceled, paused or delayed.
A $2.4 billion electric vehicle battery factory that the Chinese company Gotion was building in Michigan was canceled last year after the community there protested and mounted legal challenges to stop the project.
Other types of Chinese investment have also stirred controversy. That includes the recent purchase by Nongfu Spring, a Chinese bottled water company, of a warehouse in New Hampshire that it wants to turn into a bottling facility. The purchase was reviewed last year by the state’s attorney general.
After the inquiry found that there was no wrongdoing associated with the transaction, Gov. Kelly Ayotte of New Hampshire issued executive orders to block China, Russia and Iran from getting access to data or purchasing land or property in the state. “Foreign adversaries like China should not be doing business in New Hampshire,” said Ms. Ayotte, a Republican.
There continues to be deep skepticism within the U.S. automobile industry about competition from China. Last month, a group of American steel associations sent a letter to top Trump administration officials urging them to keep Chinese car manufacturers out of the United States.
“As representatives of our nation’s manufacturing sector, we urge you to ensure American competitiveness by not surrendering access to the U.S. auto market to the Chinese Communist Party,” they wrote. “Additionally, allowing Chinese companies and Chinese autos into the U.S. would create consequential, unacceptable national security risks.”
Agriculture also remains a contentious issue. The chairman of the House select committee on China, Representative John Moolenaar, a Republican from Michigan, introduced new legislation this month that would ban China from acquiring U.S. farmland.
“Food security is national security, and we cannot allow foreign adversaries like China to buy up American farmland near our most sensitive military and critical infrastructure sites,” Mr. Moolenaar said.
The bipartisan bill would create a requirement for the federal government to review Chinese deals involving ports and telecommunications infrastructure. It would also apply to purchases made by investors from Russia, Iran and North Korea
Michael Pillsbury, a China scholar who has served as an outside adviser to the Trump administration, said that the president’s advisers were concerned about Chinese investments in sensitive sectors such as semiconductors, artificial intelligence, biotechnology, aerospace and critical minerals. It has been a challenge, he said, to come up with a “white list” of sectors that could be considered safe.
“The red lines have moved back and forth as the nature of technology has changed,” Mr. Pillsbury said.
He added that while Mr. Trump is eager to announce a $1 trillion Chinese investment pledge, he is mindful not to incite political backlash.
“I think there’s been an effort by the administration to avoid getting into a fight with the China hawks,” Mr. Pillsbury added.
Ahead of Mr. Trump’s trip to China, a White House official downplayed the idea that the administration was seeking to create a new $1 trillion Chinese investment program. The White House continues to be focused on pushing China to increase its purchases of American farm goods, which it boycotted for much of last year when trade tensions flared.
Despite the anticipation of a Chinese investment pledge, the details and follow-through will be important.
While Mr. Trump has said that foreign investments have topped $20 trillion, according to the White House’s own investment tracker, U.S. and foreign investment pledges made during Mr. Trump’s second term total $10.6 trillion. Foreign leaders appear to have learned that they can win favor with Mr. Trump by promising whopping investment pledges that they might not fulfill.
“The devil is in the details,” said Philip Ludvigson, a partner in King & Spalding who specializes in national security risks and foreign investment, “about not only where the investment goes but also whether it happens at all.”
Ed Cullen says his mum had an unattended cremation which saved money but was “devastating” for him.
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