FTSE 100 Live: FTSE 100 Live: Blue-chips stumble into the green in final minutes of trading

• FTSE 100 up 14.75 points at 8,699.31
• Diageo reports improved sales, with US tariff bump
• Moody’s downgrades US credit rating as Congress passes tax cuts
• US-focused companies lead fallers in London 

4.47pm: Last-minute flip 

Well, that was odd. After spending most of the day in the red, the UK's blue-chips stumbled over the finish line and into the green as the economic positives from Keir Starmer's EU trade deal began to be digested.

As mentioned below, the airlines were lifted after it was revealed that the horrendous queues at European airports would likely dissipate as British tourists lose their second-class passport control status in favour of the usual gold-standard service from European immigrationn services.

No doubt the mass boycott of Benidorm and Magaluf is over (LOLs) and Spain and Portugal will have Stellas on ice for our thirsty cultural ambassadors. 

4.06pm: FTSE losses trimmed

The FTSE 100's loss has been trimmed to less than five points as we enter the final half hour of trading on Monday. 

Stocks such as easyjet and British Airways owner IAG are among the top risers, on the back of the Ryanair commentary alongside results earlier, with fares said to be bouncing back from last year's fall. 

British Gas owner Centrica is up, following the forecast of a smaller-than-expected Ofgem price cap for the coming quarter. 

Tobacco makers Imperial Brands and BAT, and grocers Tesco and M&S are also up over 1%.  

"There are some big themes that are driving financial markets right now," says Kathleen Brooks, research director at XTB.

While the US credit downgrade has been making headlines, Brooks sees this having only a fleeting impact on financial markets, since Moody’s was the last rating agency to hold onto a triple A credit rating for the US.

While the downgrade is "irrelevant" to the US economy, a large part of why stocks are selling off is the steepening of the US Treasury yield curve (longer term bonds becoming more expensive than shorter term, indicating that investors expect stronger economic growth and higher inflation, leading to higher interest rates), "and the fact that yields are rising as the dollar is falling".

"This could make borrowing more expensive for consumers and for businesses."

Brooks also highlights the UK/EU deal to strengthen post-Brexit relations, which she says will immediately help cut red tape for food and drink exports; it will boost energy cooperation and it paves the way for future economic cooperation.

UK stocks may have delayed reaction to this "reset" deal, she adds, as it "should be good for growth, it will also have many benefits for the UK economy, including the financial sector".

3.17pm: Defence details

Under the UK-EU pact agreed today, further elements of a defence deal required before UK defence companies will be able to access the joint-procurments fund include what financial contribution the UK government is making.

Various areas have reportedly been earmarked for deeper cross-Channel cooperation, including military mobility, cybersecurity and space technology. 

Talks are also ongoing on linking emissions trading schemes, so that extra carbon border taxes will be avoided on both sides.

2.56pm: Markets cutting losses

The FTSE's losses are being pared after the US opened in the red. 

In New York, the tech-powered Nasdaq is leading the decline, down 0.8%, while the S&P 500 has dropped 0.5% and the Dow Jones is 0.2% lower. 

Tesla is down 4%, Palantir is 3.7% lowe and Apple has fallen 2.8%.

Meanwhile, the London index is down just over 20 points or 0.2% at 8,664, with easyJet and BA owner IAG top of the risrs, along with Games Workshop, Teso and Fresnillo. 

1.20pm: UK-EU deal agreed

The new "strategic partnership" with the European Union has been agreed, though the defence sector is not yet part of the pact.  

In the first official UK-EU summit since Brexit in 2016, a joint statement said the UK-EU Strategic Partnership aims to enhance cooperation in various areas, including security, climate change and migration.

Agricultural and food pacts formed a key part of the deal, removing border checks on many food and drink exports from the UK into the continent, including some routine checks on animal and plant products, in return for the UK accepting alignment on relevant EU food standards.

This will make food cheaper for households, Downing Street said, while overall the deal will add £9 billion to the UK economy.

11.50am: More EU deal details

More details on the UK-EU talks are emerging, including a 12-year fishing deal.

The fishing agreement, which allows access for EU boats into UK waters, is in return for access for UK food and agricultural products into the EU.

The EU wanted a permanent agreement on fishing access, Sky News reported. The art of the deal, as Donald Trump would say. 

A spokesperson for the Tories in the Scottish parliament says, "it's an absolutely disastrous outcome".

Business Secretary Jonathan Reynolds has been speaking to the media, saying final details of updated agreements are still being ironed out, with details expected later today on defence and security.

"I can't tell you at this stage that it is all done, but I can tell you it has been very promising," he told the BBC.

"There have been some breakthroughs and fundamentally it is about making people in this country better off."

He rated the deal a "solid eight" out of 10, he told GB News, saying it is "a good deal for borders, for bills, for security in the UK and for jobs".

Stuart Rose, ex M&S CEO and current Asda chairman, who sits in the Lords as a Conservative party chair, told Times Radio that it was "nonsense" and "pathetic" for some Tories to have called the deal with the EU a "surrender"

11.09am: Another London IPO planned

Two float announcements in one day, as iFOREX has also confirmed plans to float on the main market of the London Stock Exchange in late June, following the news of the larger IPO from Cobalt Holdings earlier (see below).

The online trading platform is reported to be looking to raise £5 million in new capital in a float expected to value the business at around £50 million.

The offering will consist solely of new shares and target both institutional and retail investors, with the latter participating via the Bookbuild platform.

11am: EU growth forecasts cut

The EU Commission has slashed its GDP forecast for the bloc due to heightened trade tensions and geopolitical uncertainty.

GDP is now forecast to grow 1.1% this year, down from the 1.5% prediction from November.

Slower growth from Germany is the reason, with the bloc's largest economy now expected to stagnate this year, compared to 0.7% growth forecast in November.

Growth rates for France and Italy were also cut from 0.8% and 1% to 0.6% and 0.7%, respectively.

 

10.26am: New price cap prediction

The UK’s household energy price cap will fall 7% when the next quarterly change is made, Cornwall Insight has predicted.

From July, a typical dual-fuel household will pay £1,720 a year, down from the current £1,849 price cap under the Ofgem scheme.

While lower than the current cap, the latest forecast represents a slight increase from previous Corwall estimate, reflecting changes in wholesale energy prices and adjusted cost inputs.

10.05am: EU inflation stable 

Eurozone inflation was stable in April at 2.2%, matching the first estimate and consensus estimate.

Core inflation climbed to 2.7%, as expected. 

Rising core inflation was offset by a sharp drop in energy prices at the start of the second quarter, the figures showed, with energy inflation plunging to -3.6% year-on-year from -1.0% in March as oil prices fell after Donsald Trump's tariff announcements. 

9.57am: Stantander UK streamlining

Spain Santander is restructuring its UK arm, with details today that it is freezing salaries, reducing bonuses and cutting roles across its commercial banking division

The overhaul could affect as many as 200 staff, with some employees reassigned to roles with pay bands up to 25% lower.

While salaries cannot be reduced, pay for affected employees has been frozen, while staff have also been warned of changes to bonus structures expected to reduce future payouts.

Staff in the Navigator division, launched just three years ago as a digital platform for international trade, have been placed at risk of redundancy.

9.23am: Ryanair flies higher  

Ryanair shares are up 5.5% after the airline reported a 16% fall in annual profits, which was in line with expectations, and announced a €750 million share buyback as it said fares were rising again.

To date, summer demand was said to be "strong", with first-quarter fares on track to finish a "mid-high teen percent" ahead of a year ago and the pricing in the second quarter expected to recover "some" of the 7% decline experienced a year ago. 

Fuel for the current year is almost 85% hedged at $76 a barrel to help derisk the group from fuel price volatility.

9.04am: It's all about the bonds

The Footsie is continuing to slip lower, down 0.5% with less than 15 of the 100 constituents in green at this moment. 

Continental European stock indices are all in the red too, with Germany's DAX down 0.2% and France's CAC 0.45% lower.  

Rising bond yields are the reason, overriding the potential encouragement from reports that the UK and EU have achieved a breakthrough on trade talks, with a deal said to be pretty much done.

This EU trade deal news seems to be positive for sterling, which spiked to its best against the euro in several weeks on the news, says market analyst Neil Wilson at Saxo, while GBP/USD is pushing back up towards the 1.3350 level.

He says Moody’s downgrading the US credit rating is, in the words of Treasury Sec Scott Bessent, a "lagging indicator" and follows cuts from the other ratings agencies years ago. 

"However, we can say it underlines concerns around the budget deficit and a sweeping tax cut bill, which passed a key Congressional committee stage on Sunday," Wilson says.

"And it’s a fact that the 30yr Treasury yield has since broken a key level at 5% and the 10yr has risen above 4.5%, which is clearly linked to worries about a tax bill and ‘erratic’ economic policy...on which note Bessent also said that US tariffs that are on pause for 90 days could be quickly reimposed if countries don’t negotiate in good faith.

"I think this is going to heighten tariff risks again and perhaps that is why stocks are down today... it’s the US exceptionalism> US repudiation trade."

Move in US Treasury yields are worth watching, says Wilson, "as it will have knock-on for sterling via the gilt market – UK 30yr yields are now knocking on 5.5%...well above anything seen during the Truss episode. This is a major headache for policymakers on both sides." 

8.40am: London IPO confirmed

Cobalt Holdings PLC, which plans to buy and hold cobalt for the long term, has today confirmed its plan to undertake an initial public offer in London.

Glencore PLC (LSE:GLEN) has agreed to be a cornerstone investor, investing US$24.3 million for what will be a 10% post-IPO stake.

Anchorage, the US-based investment firm, will also contribute a cornerstone stake of 9.5% for US$23 million.

Cobalt says it expects its shares will begin trading on the London main market on or around 10 June.

Alongside the global offer targeted at institutional investors, there will be an offering to for UK retail investors by RetailBook, the platform set up by Peel Hunt, Numis, Jefferies, Hargreaves Lansdown and Rothschild.

8.25am: Defence sector in focus in EU talks

BAE Systems PLC (LSE:BA.) and other defence companies are in the red so far this morning, while the sector is one of those at the core of reports about UK-EU talks going on today. 

An announcement on defence and security is expected later today, according to various media reports.

The reports suggest this will include UK companies getting access to the new £125 billion EU defence fund, from which they have so far been shut out.

The European Commission proposed the new fund in March after the US indicated it would no longer help defend the continent.

8.13am: FTSE stumbles at the open

The FTSE 100 has stumbled lower in first trades, down 34 points to 8,650.6 so far. 

Investment trusts with a large exposure to the US are leading the fallers, namely Scottish Mortgage Investment Trust PLC (LSE:SMT), Pershing Square Holdings (LSE:PSH), Polar Capital Technology Trust PLC (LSE:PCT) and Alliance Witan PLC (LSE:ALW)

US-exposed names such as JD Sports, Intercontinental Hotels, Compass, Pearson, Ashtead and Informa are also down. 

Topping the risers is precious metals miner Fresnillo, up 3.8% as gold and silver prices climb. 

Diageo is up 2.7% on the back of its third-quarter results. 

7.55am: Mobico chugging away

National Express owner Mobico Group PLC (LSE:MCG) has reported first-quarter results showing 9% revenue growth, with an increase from Spanish arm ALSA offsetting declines in the UK and Germany.

The divestment of the US School Bus business to I Squared Capital was said to remain "on track" to complete in the third quarter, expected to generate $365-385 million in net proceeds.

New executive chair Phil White, who took on a more expanded role on an interim basis when CEO Ignacio Garat stepped down earlier this year, said his first months at the company have shown him that "considerable value and momentum exists across the group, and 9% revenue growth in the first quarter is evidence of continuing growth in demand for our services, particularly in ALSA".

7.40am: Diageo sees sales bump, guidiance unchanged 

Diageo PLC (LSE:DGE) has reported an improved rate of revenue growth in the past quarter and launched a new efficiency programme, but said sales trends were boosted by "phasing" and are likely to reverse in the current quarter. 

This seems to be another example of companies seeing sales boosted by front-loading of purchases between when tariffs were announced and when they came into effect. 

The Guinness and Johnnie Walker producer estimated that it is facing an unmitigated impact of around $150 million from US tariffs on an annualised basis.

But it said it is launching the first phase of a new plan of action to "create a more agile operating model", including cutting $500 million of costs, which it expects will deliver around $3 billion of free cash flow per year from its next financial year.

7.24am: UK-EU 'breakthrough'

There has been a "breakthrough" in talks between London and Brussels, the BBC is reporting.

Citing sources from within 10 Downing Street, talks last night were said to have made important progress aherad of Keir Starmer meeting EU leaders at a summit today that is designed to try and reset the post-Brexit relationship between the two sides. 

Hurdles to a potential agreement over fishing rights were "solved" last night, government sources said, with talks also covering defence, trade and a youth mobility scheme.

The minister for UK-EU relations, Nick Thomas-Symonds, told the BBC at the weekend that the government was "confident" that a deal to cut red tape on food exports and imports would be agreed.

7.15am: FTSE 100 set to open lower

The FTSE 100 is predicted to start the week on the back foot, with Asian markets already in the red and US futures pointing to the same.  

Futures for the London blue-chip index indicate a drop of around 20 points at the open, after last week finished at 8,684.56, almost a seven-week high after just shy of 130 points were added over the five days.  

Asian markets have opened the week mostly in the red, with market analysts citing the fallout from credit agency Moody’s downgrading the US sovereign credit outlook from the top Aaa rating to Aa1.

Moody's cited concerns about the country's rapidly rising debt toward the $37 trillion mark and a budget deficit reaching 7% – the highest in peacetime.

"While the move is largely symbolic, it may put slight upward pressure on Treasury yields, which could tighten financial conditions globally –especially in more rate-sensitive parts of Asia," said Kyle Rodda at Capital.com. 

The US dollar is a bit lower this morning – with the pound up 0.3% at $1.33 – and gold climbed back to almost $3,230. 

What to watch on Monday 19 May

A trading update from Diageo is likely to spark earnings revisions, as for many across the sector, driven in part by recent euro strength and weakness in key markets like the US and China...read more

Announcements due:

Trading update: Diageo

Finals: Big Yellow Group, Kainos

Overseas earnings: Ryanair

Economic announcements: Rightmove UK house price index (UK), Inflation (EUR), Industrial Production (CHN), Retail Sales (CHN)