The FTSE 100 climbed 64 points to 10,715.5 on Tuesday, with consumer-facing stocks and energy names providing the bulk of upward momentum in early trading.
Burberry led the risers with a gain of 3.4%, while Diageo, Unilever and Reckitt posted strong advances as defensive names attracted fresh buying interest across the board.
Shell (SHEL) shares rose 3.1%, making the oil giant one of the most significant contributors to the index’s gains given its position as the third-largest constituent.
Market analyst Richard Hunter at Interactive Investor highlighted defensives including RELX, Reckitt Benckiser and Unilever, with the latter receiving the added benefit of two broker upgrades on the day.
Hunter said the UK market is “largely exempt from the tribulations of the AI trade outlook,” describing the FTSE 100 as a source of stability during periods of elevated volatility in the technology sector.
He noted, however, that the index has “struggled to find a new positive catalyst to enable to recapture its record high in February, when its selection of strong, stable and developed companies attracted global inflows.”
Hunter added that the index “has added 7.4% so far this year which, coupled with an average dividend yield of 3% gives an aura of reliability as opposed to runaway optimism.”
Mining stocks including Antofagasta, Anglo American, Fresnillo and Rio Tinto all fell between 2% and 3%, while Glencore and Endeavour also declined, acting as a drag on the broader index.
Polar Capital Tech Trust led all decliners with a fall of 3.3%, with Samsung Electronics representing a top ten holding at 2.8% of total assets, connecting the trust directly to the Korean market selloff.
South Korea’s Kospi closed down 4.6% after triggering an automatic circuit breaker during an 8% intraday plunge, as Samsung fell as much as 9% before closing 6.45% lower despite a 19-fold surge in quarterly operating profit.
Market analyst Ipek Ozkardeskaya at Swissquote explained the counterintuitive market reaction, noting that the “so-called whisper number was even higher than what analysts had pencilled in.”
Ozkardeskaya added that when unofficial earnings targets circulate ahead of results, “companies can beat analysts’ estimates and still see their shares tumble simply because they failed to meet what the market had quietly convinced itself was achievable.”
Shell also confirmed it had agreed to sell its downstream business in South Africa to UAE’s ADNOC Distribution for an enterprise value of $1 billion, prior to adjustment for net debt and working capital.
The deal covers 580 fuel stations, wholesale fuel, aviation and lubricants operations, with ADNOC planning to retain the Shell brand under a long-term licensing agreement going forward.
Shell separately issued a pre-results update stating that integrated gas production is expected to reach 610,000 to 650,000 barrels of oil equivalent per day in the second quarter, down sharply from 909,000 in the first quarter due to disruption from the Iran war affecting Qatari volumes.
Capita shares tumbled nearly 16% after the outsourcer apologised for delays in administering the Civil Service Pension Scheme following a stinging parliamentary rebuke from Paymaster General Nick Thomas-Symonds.
Thomas-Symonds told Parliament that Capita had been “completely unprepared” for taking over the contract and that its systems were “overwhelmed,” leaving a backlog that peaked at 120,000 unresolved cases.
Analyst Christopher Bamberry at Peel Hunt noted that the Cabinet Office had deployed more than 140 officials to address the backlog and would recover associated costs directly from Capita.
The government has withheld £9.9 million of payments to the company, and the pension scheme is now considered a prime candidate for insourcing, though an immediate termination would cause severe disruption.
UK house prices edged up 0.2% in June, reversing May’s equivalent decline, with annual growth accelerating slightly to 0.6% from 0.5%, according to the Lloyds house price index, formerly published under the Halifax brand.