London’s FTSE 100 closed higher on Tuesday, lifted by a sharp drop in oil prices and growing investor anticipation ahead of Nvidia’s closely watched earnings report.
The FTSE 100 Index ended the session up 31.84 points, or 0.3%, closing at 10,886.16, while the FTSE 250 gained 138.57 points, or 0.6%, to reach 24,856.05.
Melrose Industries was the standout performer on the blue-chip index, soaring 10% after the Birmingham-based aerospace and defence company confirmed it will not face a criminal investigation over its Garden Grove site in California.
The company said it is targeting late September to resume manufacturing at the site, which was forced to shut after an overheating chemical tank caused a mass evacuation back in May.
Melrose announced a claims programme providing up to 100 million dollars for residents and businesses seeking damages related to the incident.
Citigroup analyst Charles Armitage said although some civil fines are still possible, “we believe this largely quantifies the financial impact of the incident and materially reduces the risk for investors.”
Across the Atlantic, US markets also traded higher, with the Dow Jones Industrial Average up 0.1%, the S&P 500 gaining 0.2%, and the Nasdaq Composite rising 0.4%.
Nvidia (NVDA) advanced 1.1% ahead of its results due after Wednesday’s Wall Street close, with investors increasingly bullish on what the chipmaker might deliver.
Kathleen Brooks, research director at XTB, said the market is starting “to price in the effects of a potential monster earnings report that restores faith in the AI trade.”
Brooks added that “the most actively traded stocks in the US right now are all the major AI names, including Nvidia, Tesla, Micron and SanDisk,” pointing to potential volatility later in the week around Nvidia’s results.
In Europe, Germany’s DAX 40 rose 0.7% after the ifo Institute reported that German business climate improved more than expected in August, with the index climbing to 88.8 points from a revised 86.7 points in July.
JPMorgan analyst Greg Fuzesi noted that “the larger-than-expected jump in today’s ifo, driven by improved current conditions and expectations, reinforces the sense of cyclical lift and comes despite the renewed increases in energy prices.”
Oil prices fell sharply, with Brent crude for October delivery dropping to 89.31 dollars a barrel on Tuesday from 92.74 dollars late Monday, providing further support to equity markets globally.
David Morrison, senior market analyst at Trade Nation, pointed to speculation of a “sudden, and unexpected, breakthrough in US-Iranian negotiations” as the reason behind the oil price falls.
Morrison noted that Field Marshal Asim Munir, Pakistan’s Chief of the Army Staff, was reportedly returning to Tehran after talks with an offer to halt the US blockade and lift sanctions under a memorandum of understanding.
Back in London, retailer Next rose 2.4% after Citigroup upgraded the stock to “buy” from “neutral,” with analyst Monique Pollard arguing the company deserves a higher valuation given its rapid international growth.
Pollard noted Next’s international segment has grown at a 20% plus five-year sales compound annual growth rate through 2025, now accounting for more than 20% of product revenue.
On the FTSE 250, housebuilder Vistry surged 16% after securing an initial grant of 350 million pounds, the largest possible first allocation, under the UK Government’s 39 billion pound social and affordable homes programme.
Russ Mould, investment director at AJ Bell, called the award a “major fillip” for chief executive Adam Daniels ahead of a strategy day at the end of next month, though warned the company still faces a tough path to hit full-year profit targets.
Jupiter Fund Management rose 4.3% after Berenberg initiated coverage with a “buy” rating and a 187p price target, while Smarter Web fell 8.5% following the departure of Jesse Myers, its head of bitcoin strategy, effective September 1.