UK Stocks Mixed as US Inflation Rises and Job Market Cools
British stocks closed Tuesday on a mixed note as investors weighed higher-than-expected U.S. inflation data against signs of a cooling UK labour market—both key indicators influencing future interest rate moves.
The FTSE 100 index was nearly flat, showing little movement in large-cap stocks. In contrast, the FTSE 250 midcap index rose by 0.6%, reflecting more positive sentiment towards domestic UK-focused companies.
US Inflation Ticks Up, Fed Rate Cuts Delayed
In the U.S., consumer prices rose by 0.2% in April following a 0.1% decline in March. While modest, the rebound in inflation has nudged traders to delay expectations of a Federal Reserve rate cut until September. Markets are bracing for further price pressure as tariffs begin to drive up import costs.
Cooling UK Labour Market Eases BoE Pressure
Domestically, the UK job market sent fresh signals of slowing momentum, with a decline in employment levels and a cooling in wage growth. These developments are likely to reassure the Bank of England (BoE) that inflationary pressures are easing, reducing the urgency for further rate hikes.
Just last week, the BoE cut interest rates by 25 basis points, citing potential economic drag from U.S. tariffs imposed by President Trump. However, a three-way split among policymakers surprised markets and reduced the likelihood of rapid additional cuts in the near term.
Sector Highlights
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Industrial metal miners gained 1.4%, supported by a rise in copper prices.
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The energy sector added 1.1%, with crude oil prices climbing over $1 a barrel.
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Shell led gains on the FTSE 100, rising 1.2%.
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DCC, a sales and marketing services firm, tumbled 6.5% after reporting 2025 adjusted operating profit below market expectations.
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GSK dropped nearly 3% after announcing, alongside iTeos Therapeutics, the discontinuation of lung cancer therapy development.
Trade War Pause Offers Temporary Relief
On a broader scale, global markets had rallied on Monday after the U.S. and China agreed to a 90-day pause in their escalating trade war. The truce includes tariff reductions and suspension of new duties while negotiations for a more permanent solution continue.
Conclusion
Markets remain on edge as central banks and investors respond to shifting economic indicators. With the UK labour market softening and US inflation rising, the coming weeks may prove pivotal for monetary policy both in London and Washington. While the BoE’s recent cut signals concern, internal divisions suggest a cautious approach ahead. Meanwhile, sector-specific moves and global trade headlines will continue to shape investor confidence.
