London close: Stocks mixed as OECD downgrades growth forecasts
By Josh White
Date: Tuesday 03 Jun 2025
(Sharecast News) - London stocks ended Tuesday's session on a mixed note, with strength in some sectors offset by weakness among mining stocks and broader concerns over global growth prospects.
The FTSE 100 index edged up 0.15% to close at 8,787.02 points, while the FTSE 250 dipped 0.05% to 21,017.78 points.
In currency markets, sterling was last down 0.21% on the dollar, trading at $1.3515, as it rose 0.4% against the euro to change hands at €1.1885.
"A mixed session in Asia amid shrinking China manufacturing PMI bled into European stock indices, most of whom, expect the German DAX 40, ended the day in negative territory despite eurozone inflation falling below the ECB's 2% target, the first time since September 2024," said IG senior technical analyst Axel Rudolph.
"The slowing inflation bolsters rate cut expectations for Thursday's ECB monetary policy meeting and may allow the central bank to cut its rates twice more by year end.
"Increased private sector job openings but the first decline in five months in US factory orders seem to have balanced each other out with investors looking ahead to Friday's non-farm payrolls."
Rudolph noted that the OECD's projection for global economic growth to slow to 2.9% in 2025 and 2026, down from 3.3% in 2024, was primarily due to escalating trade tensions and protectionist policies.
"Notably, US tariffs under president [Donald] Trump, which are also expected to reduce US growth to 1.6% in 2025."
OECD downgrades global growth outlook, trims UK forecast
In economic news, the Organisation for Economic Co-operation and Development (OECD) projected global growth of 2.9% in both 2025 and 2026 in its latest estimates, down from previous estimates of 3.1% and 3.0%.
The downgrade was attributed in large part to the economic disruption caused by new US tariffs, which had strained international trade and prompted retaliatory measures from key partners.
It said the US, Canada, Mexico and China were likely to experience the sharpest slowdowns.
The OECD now expected US growth to fall to 1.6% this year from 2.8% in 2024, with only a marginal recovery to 1.5% in 2026.
UK growth was also revised down, to 1.3% this year and 1.0% in 2026.
Inflation was expected to ease globally to 3.6%, though higher trade-related costs were likely to persist, especially in the US, where inflation was forecast to reach 3.2%, up from a previous estimate of 2.8%.
The OECD warned that ongoing policy uncertainty and fragmented trade relations pose a threat to investment and confidence.
"As economic data trickles in, a picture is starting to emerge of the new economic order," said Kathleen Brooks, research director at XTB.
"Trump's tariffs have delivered an economic shock, and the damage could take some time to reverse."
In the UK, Bank of England governor Andrew Bailey told MPs on Tuesday that further rate cuts would depend on a slowdown in wage growth and stabilisation in global trade.
The BoE cut rates by 25 basis points in May, but opinions on the Monetary Policy Committee were split, with two members advocating for a deeper cut and two others voting to hold steady.
Bailey said he remained cautious about the economic outlook, adding that "the path remains downward" for rates, but is clouded by geopolitical and inflationary risks.
Elsewhere, eurozone inflation fell below the European Central Bank's 2% target for the first time since 2022.
Preliminary data from Eurostat showed annual inflation slowed to 1.9% in May from 2.2% in April, bolstering expectations of a rate cut at this week's ECB meeting.
Core inflation also eased, and unemployment across the bloc edged lower to 6.2%.
Switzerland saw annual deflation for the first time in over four years, as the strong franc and lower import prices pushed the May consumer price index down 0.1% year-on-year.
Monthly inflation remained modest at 0.1%.
In Asia, China's manufacturing sector contracted more sharply than expected in May, with the Caixin/S&P Global PMI falling to 48.3, the weakest since September 2022.
The surprise downturn underscored ongoing weakness in the Chinese economy and added to global growth concerns.
Miners and housebuilders weaker, defence names in demand
On London's equity markets, miners were broadly weaker following the disappointing Chinese manufacturing data, which raised concerns over global demand.
Anglo American led the sector lower, down 2.12%, while Rio Tinto dropped 1.11%, Antofagasta slipped 0.64% and Glencore lost 0.56%.
Housebuilders also declined sharply after a profit warning from low-cost developer MJ Gleeson, which saw its shares plunge 21.71%.
Vistry Group fell 5.85%, Crest Nicholson was down 3.12%, and Barratt Redrow, Persimmon, and Taylor Wimpey dropped between 1.67% and 2.16%.
Pearson slid 5.9% after IDP Education, an Australian provider of English-language testing, warned of significantly lower volumes, sparking concerns over demand for testing services.
Pennon Group fell 4.42% after the water utility reported a swing to a full-year underlying pre-tax loss of £35.1m, compared to a profit of £16.8m a year earlier.
On the upside, Centrica rose 4.05%, buoyed by defensive positioning and solid investor interest.
Defence names were also in favour - Chemring gained 6.68% after reporting higher interim profits and record orders, while QinetiQ rose 2.31%, supported by broader optimism in the sector.
Rolls-Royce advanced 2.3%, BAE Systems added 1.69%, and Babcock climbed 1.38%, following the UK government's fresh commitments to defence spending under the AUKUS and warhead programmes.
Kier Group rose 2.14% after lifting its operating profit margin target and affirming positive trading momentum.
British American Tobacco ended 1.33% higher after raising its full-year revenue growth guidance.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,787.02 0.15%
FTSE 250 (MCX) 21,017.78 -0.05%
techMARK (TASX) 4,879.59 0.29%
FTSE 100 - Risers
Centrica (CNA) 164.00p 4.36%
Airtel Africa (AAF) 183.40p 3.15%
Rolls-Royce Holdings (RR.) 894.20p 2.92%
Melrose Industries (MRO) 473.50p 2.73%
Ashtead Group (AHT) 4,265.00p 2.57%
BAE Systems (BA.) 1,957.00p 1.95%
Shell (SHEL) 2,510.00p 1.68%
The Sage Group (SGE) 1,238.00p 1.56%
British American Tobacco (BATS) 3,391.00p 1.47%
InterContinental Hotels Group (IHG) 8,520.00p 1.43%
FTSE 100 - Fallers
Pearson (PSON) 1,085.50p -6.62%
Rentokil Initial (RTO) 350.90p -3.39%
Severn Trent (SVT) 2,655.00p -2.46%
Haleon (HLN) 405.10p -2.24%
GSK (GSK) 1,485.00p -2.11%
Barratt Redrow (BTRW) 444.90p -2.07%
Persimmon (PSN) 1,293.50p -2.04%
JD Sports Fashion (JD.) 80.88p -2.03%
United Utilities Group (UU.) 1,157.50p -1.99%
Taylor Wimpey (TW.) 114.75p -1.88%
FTSE 250 - Risers
Chemring Group (CHG) 519.00p 6.68%
THG (THG) 27.90p 4.57%
Harbour Energy (HBR) 190.20p 4.11%
Indivior (INDV) 953.50p 4.09%
Allianz Technology Trust (ATT) 399.50p 3.20%
Auction Technology Group (ATG) 467.00p 3.09%
RS Group (RS1) 571.50p 2.88%
W.A.G Payment Solutions (WPS) 72.00p 2.86%
Rotork (ROR) 319.40p 2.70%
QinetiQ Group (QQ.) 533.00p 2.60%
FTSE 250 - Fallers
Vistry Group (VTY) 583.80p -6.17%
Pennon Group (PNN) 488.60p -3.91%
Ocado Group (OCDO) 243.50p -3.79%
Ibstock (IBST) 189.40p -3.76%
Raspberry PI Holdings (RPI) 460.40p -3.48%
Patria Private Equity Trust (PPET) 548.00p -3.01%
Crest Nicholson Holdings (CRST) 174.50p -2.79%
Genuit Group (GEN) 389.50p -2.75%
Lancashire Holdings Limited (LRE) 588.00p -2.33%
AO World (AO.) 101.00p -2.32%
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