Summary:
- U.K. unemployment rate remain unchanged in Feb
- U.S.-U.K. trade agreement expected
- Analyst upgrades signal positive outlook for U.K. companies
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FirstGroup lifts guidance; Wise posts 28% Q4 volume growth
- Ryanair (LON:0RYA) reportedly flags Boeing delays on tariff risk
Investing.com -- British stocks closed higher on Tuesday as investors digested official data showing the U.K. unemployment rate held steady in February, in line with expectations.
As of 1530 GMT, the blue-chip index FTSE 100 and FTSE Mid-Cap 250 gained by 1.4%. The British pound rose by 0.4% against the dollar to 1.32.
Top gainers from the region include 3I Group PLC (LON:III), up 5.9% and St. James’s Place PLC, which rose by 4.2%. On the other hand, Diageo PLC (LON:DGE) fell 3.5% and Glencore PLC (LON:GLEN) dropped about 1.6%, making them among the bottom performers.
In Europe, Germany’s DAX rose by 1.5%, while the CAC 40 in France gained by 0.9%.
Wage growth pressures BoE amid rising economic risk
The Office for National Statistics reported that the unemployment rate held steady at 4.4% in the three months through February, matching expectations and showing no change from the previous reading.
Meanwhile, regular pay across the economy—excluding bonuses—climbed to an annual growth rate of 5.9% during the same period, edging up from a revised 5.8% in January.
Capital Economics noted that although wage growth is still elevated, increasing downside risks to inflation and economic activity, partly due to higher U.S. tariffs, could prompt the Bank of England to shift its focus.
Rather than being chiefly concerned about inflationary pressures from rising pay, the Bank may begin to place greater emphasis on the potential drag on growth. As a result, interest rates might be reduced more quickly than the firm’s current forecast of a decline from 4.50% to 4.00% by year-end.
Trade agreement between U.S. and U.K. expected
U.S. Vice President JD Vance indicated that there is a “good chance” of a trade agreement between the U.S. and the U.K., driven by President Donald Trump’s strong affinity for Britain.
Speaking to the British news and opinion platform UnHerd, Vance expressed confidence that the two nations would reach a “great agreement” that serves their mutual interests.
UK’s Wise sees 28% jump in cross-border volumes in Q4
Wise PLC (LON:WISEa) shares gained about 1%, following the announcement on Tuesday that cross-border transaction volumes grew by 28% year-over-year in the fourth quarter of its fiscal year 2025, reaching £39.1 billion.
The fintech firm also saw a 15% increase in underlying income on a constant currency basis, bringing the total to £350.4 million for the quarter. Active customer numbers climbed to 9.3 million during the period.
Rail strength, lower debt boost FirstGroup outlook
FirstGroup PLC’s (LON:FGP) upbeat trading update on Tuesday prompted RBC Capital Markets to raise its earnings forecasts for fiscal 2025, citing stronger-than-expected rail performance and a lower debt burden. Shares traded 3.2% higher.
The company also cut its adjusted net debt guidance to £90–95 million, down from a previous range of £130–135 million.
Analysts rating changes on U.K. companies
Several U.K. companies received upgraded ratings from major investment banks, reflecting improved business fundamentals and market outlooks. Barclays upgraded JD Sports Fashion PLC (LON:JD) to Equal Weight on Tuesday, citing improved capital allocation and a better reflection of risks in the stock’s valuation.
Meanwhile, Barclays (LON:BARC) downgraded Domino’s Pizza (NYSE:DPZ) Group PLC (LON:DOM) to Underweight, citing market maturity and ongoing cost inflation stressing its business model. The firm expressed concerns that the company may need to support franchisees further and sees the push for a second brand as a sign of maturity risk.
RBC Capital upgraded Rotork PLC (LON:ROR) to Outperform, noting that while its shares have declined alongside the sector over the past three months, the company’s business mix remains more resilient, both across its end markets and against specific tariff risks.
RBC Capital also upgraded Discoverie Group PLC (LON:DSCV) to Outperform, noting that while the company faces risks from U.S. tariffs and short-cycle demand, it is trading at about a 30% discount to its long-term P/E average.
On Monday, Goldman Sachs (NYSE:GS) upgraded Next PLC (LON:NXT) to Buy, highlighting strong international growth, continued outperformance in the U.K. market, and improving supply chain conditions as key drivers of ongoing momentum.
Ryanair flags Boeing delays on tariff risk
In other company news, the Financial News reported that Ryanair Holdings PLC (IR:RYA) Chief Executive Officer Michael O’Leary has indicated that the airline might push back deliveries of Boeing Co (NYSE:BA) aircraft if potential U.S. trade tariffs drive up costs significantly.
O’Leary said Ryanair could defer the arrival of 25 planes, currently expected from August, until as late as March or April 2026 should the tariffs come into effect.
European economic data
On Tuesday, economic data showed positive signs for the euro-zone economy. Industrial production in the region rose 1.1% month-on-month in February 2025, marking the second consecutive month of growth. This exceeded expectations, with analysts forecasting a mere 0.1% increase, while Capital Economics had predicted a 0.7% rise.
In France, consumer inflation remained subdued at 0.8% year-on-year in March, providing the European Central Bank with room for further interest rate cuts in the near future.
Meanwhile, German wholesale prices rose by 1.3% annually in March, although there was a slight monthly decline of 0.2%.