FTSE 100 index teasingly close to record after UK spending review, Trump 'done deal' with China

• FTSE 100 rises 18 points to 8,871
• Index still short of intraday record high
• Markets mull over 'framework' deal agreed by China and US  

4.01pm: Could the FTSE notch a new closing high?

The FTSE 100 is on track for a middling session, but could add some sparkle if it finishes above its record closing high of 8,871.31 from March. 

Let's see what happens in the last half hour. 

Fawad Razaqzada, market analyst at City Index, says a quick peek at the charts "suggests the global macro trend is still quite bullish", including the UK blue-chip index.

"The FTSE 100 forecast is positive, buoyed by optimism that the US and China will hopefully reach an agreement. This optimism is helping keep the FTSE in an overall bullish trend, after the index ended a tight consolidation by breaking higher."

He says appetite for risk "remained firm" after the release of weaker-than-expected US inflation data, "which boosted speculation that the Federal Reserve will cut interest rates sooner than expected – possibly in September instead of October – and potentially twice before the year is out.

"However, the optimism was limited as some feared the tariff-induced inflation was likely to show up in the coming months, which may limit the easing potential."

Reeves' spending review saw markets "overall pleased".

3pm: Wall Street unsure at open 

Wall Street stocks were searching for direction in early trading on Wednesday. 

The S&P 500 rose initially, then fell into the red and was lately up 0.1% at 6,045.60. Same story for the Dow Jones and Nasdaq, now up 0.2% and 0.1% respectively.  

The Russell 2000 index of mostly small and mid-cap stocks has risen 0.3%.

Top of the S&P risers are Warner Bros Discover and Starbucks, with the latter saying it has received "a lot of interest" from potential partners interested in a stake in its China business.

Fallers are led by Lockheed Martin, Nucor Corp and Intel.

2.28pm: US CPI reaction 

The jump in stocks is not all that, with markets dialling back their reactions to the Trump statement and US CPI.

US futures have dropped back, with those for the S&P 500 having flipped from a 0.3% fall to a 0.4% rise and now this has driften down to 0.2%.   

London's FTSE is also giving up some of its gains too. 

XTB analyst Kathleen Brooks says the reaction in financial markets to the UK spending reivew has been "calm so far", with GBP/USD back above $1.35, while UK bonds falling sharply after the US CPI reading.

"The Chancellor was saved by US inflation," says Brooks, as the core rate of inflation did not rise as expected.

"Digging deeper into the US figures, there is no sign that tariffs are having an impact on consumer prices... Thus, now that the US has agreed a tariff deal with China, fears about the inflationary impact from President Trump’s trade policy could be overdone.

"However, tariffs are still set to be elevated for Chinese imports."

While Trump is framing this deal as a win for the White House, Brooks says "some will worry that a 55% tariff rate on China is till hefty, and may  impact US inflation down the line, and the markets are still pricing in just less than 2 rate cuts from the Fed later this year".

2.01pm: Fiscal rules need tweaking

More suggestions that the government will need to tweak its fiscal rules.

The spending review delivers Labour's pledge to provide additional funding to the NHS, childcare and schools, housing and defence, but economist Raj Badiani at S&P Global Market Intelligence says other public services fared less well.

"The government’s fiscal constraints imply other departments are to face tighter budget settlements, struggling to keep pace with inflation during the next three years.  

"The government will face a persistent challenge of providing substantial funding increases to health, housing, defence and infrastructure development, while also ensuring adequate financing to non-protected services - all against the backdrop of meeting its 'non-negotiable' fiscal rules."

Balancing the books is "likely to require a series of painful fiscal announcements", he adds. Later this year the Budget "could be another tough fiscal event, should the UK economy falter amid heightened domestic and external tensions".

Under pressure to deliver planned deficit reductions to ease its net debt position and to reduce its vulnerability to financial and bond market stresses, there are "limited fiscal options this autumn", because of Reeves' and Starmer's pledge not to raise the main tax rates, with the fiscal framework not containing a formal process to suspend the rules in the event of extraordinary economic circumstances.

"The government could be tempted to tweak its fiscal rules, but any adjustment needs to pay careful attention to the twitchy gilts market, already uncomfortable with plans to ramp up borrowing."

1.33pm: FTSE jumps

The FTSE 100 and 250 have both jumped higher, US futures too.

This comes just as the US inflation release is accompanied by a comment from US President Donald Trump, who says "our deal with China is done". 

In an ALL CAPS statement on social media, he says the deal is "subject to final approval with President Xi and me".

Trump says "full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)."

"We are getting a total of 55% tariffs, China is getting 10%. Relationship is excellent! Thank you for your attention to this matter!"

The White House clarified that this means the US is keeping a 10% baseline tariff, plus 20% fentanyl tariff on China, with Trump to hold the extra China tariffs at 30%.

1.28pm: Review reactions

Reactions to the speech are coming in, as is a link to the spending review document. 

Stephen Millard of the National Institute of Economic and Social Research (NIESR), says Reeves' insistence again that her fiscal rules are ‘non negotiable’ mean that the increases in spending announced make it "now almost inevitable that if she is to keep to her fiscal rules, she will have to raise taxes in the Autumn Budget".

NIESR director Adrian Pabst contradicts this somewhat by highlighting the Chancellor's spending cuts that he reckons "will likely hit public services".

However, he backs the Chancellor's statement that economic renewal has to be felt in everyday lives, with the poorest 40% of UK households seeing living standards down sharply in the previous parliament and not yet returned to levels prior to the 2022 spike in inflation. 

1.20pm: Reeves wraps up

To wrap up, Reeves announces a record cash investment in the NHS, increasing spending by 3% a year in real terms over the review period.

With the government soon to publish its 10-year plan for NHS renewal, these spending plans are above the 2.8% real terms increase that had been expected.

Finally, Reeves sums up her spending plans thus: "In place of chaos, I choose stability. In place of decline, I choose investments. In place of pessimism, division and defeatism, I choose national renewal."

There is no stock market reaction. 

Nor on bond markets, with morning moves higher in gilt yields remaining little changed.    

1.13pm: Reeves on savings and regional redevelopment 

This was the first line-by-line review of govenment spending in 14 years, Reeves says. 

Reducing consultancy spend and selling some unused government land has helped find savings, while mentioining the private schools VAT loophole being closed to raise money for state schools.

Government investment in the regions was the previous subject, along with support for households and employment rule changes. 

Scotland is getting £52 billion, £20 billion for Northern Ireland and £23 billion for Wales, she says, as part of this spending review. 

On regeneration, Reeves also announces funding for up to 350 communities, especially in the most deprived areas, including Blackpool, Stockport, Stoke, Swindon and parts of Newcastle.

A Growth Mission Fund "to expedite local projects that are important for growth", citing Southport Pier, Kirkaldy seafront and high street and Peterborough's new 'sports quarter'. 

This brings her to people feeling safe on their local streets. She said £7 billion was previously announced to fund 14,000 new prison places and reforms of the probation system. Today she also says police spending power will be increased 2.3% per year in real terms over the review period, more than £2 billion in total for 13,000 into neighbourhood police roles.  

Reeves mentions the pay rises for doctors, teachers, higher minimum wages and a ban on zero-hour contracts. 

The school bus fare cap is being extended, the winter fuel payment and the warm homes plan are being extended. 

1.02pm: Housing and transport spendning

On social housing, which Reeves says has been "neglected for too many decades", and announces the £39 billion of funding in what she calls the "biggest cash injection into social and affordable housing for 50 years". 

The funding will go into an affordable housing programme, with towns including Blackpool, Preston and Sheffield have plans in place.

She says planning reforms will allow this. 

An additional £10 billion is being provided for "financial investments, including to be delivered though Homes England, to crowd in private investment and unlock thousands more homes".

That's why Vistry shares were up 9% this morning, thanks to leaks on this cash. 

Transport also gets £15 billion, as announced earlier this week. There will be a £4 billion settlement for Transport for London, and a fourfold increase in local transport grants around the regions.

Investments are being made in major rail upgrades, including the Trans-Pennine route between Leeds and Manchester. A further £3.5 billion of investment for that route is confirmed today, plus flagging an upcoming announcement on "Northern Powerhouse Rail" soon.  

A further £2.5 billion is announced for East-West rail between Oxford and Cambridge. The Midlands Rail Hub and railways in Wales are also getting extra cash.  

12.55pm: Innovation, AI, training and steel

On innovation, Reeves talks about universities and researchers. 

R&D funding will rise to £22 billion per year by the end of the review period. She announced £2 billion to back the AI Action Plan.

For small businesses, the British Business Bank will get an inrease its capacity to £25.6 billion. 

Third, she says there will be a record £1.2 billion a year by the end of the review for training and apprenticeships.  

Earlier, she says the government was not willing to allow Scunthorpe lose its steel factory, and that Heathrow airport has signed the steel charter, so the third runway will be built with British steel.

12.49pm: Defence and energy spending plans

Rachel Reeves confirms £11 billion of defence spending, including £600 million for security and intelligence and £4.5 billion in munitions and over £6 billion in new nuclear-powered submarines.   

On controlling borders, she noted that £150 million was announced before, and today she says that will increase by up to £280 million more for the new Border Security Command.

To tackle the asylum backlog, she says the use of hotels to house asylum seekers "will be ended in this parliament", to cut hear more appeal cases and return people whose cases fail.

On jobs and manufacturing, she gives the example of energy, "we understand that energy securuty is national security" and so is investing in nuclear power with a £30 billion commitment. 

This included £14 billion for Sizewell C, supporting 10,000 jobs. And £2.5 billion the Rolls-Royce small nuclear reactor technology, the first of a potential "full fleet of small modular reactors to be deployed across the UK".

To strengthen Britain's position in the nuclear sector, £2.5 billion is also being invested in nuclear fusion.     

Carbon capture and storage also gets a mention. The Acorn Project in Aberdeen also is cited, plus the Viking Project in Humberside. 

Reeves says all these will help reduce the dependence on overseas oil and gas. 

12.38pm: Spending review speech begins

Rachel Reeves is up and speaking. 

She says total departmental budgets will grow 2.3% a year in real terms, which she says compares to Conservative austerity cutting 2.9%. 

"My choices are different," she says, which she says are based on her fiscal rules, which "are the foundation of stabilty and investment". 

Day to day government spending must be based on tax receipts, which she says, allows her to allocate £190 million more per day compared to the plans of the previous government.

The second fiscal rule allows investment while getting debt down.    

12.16pm: Flattish markets ahead of US inflation

Gains for the FTSE 100 and 250 have waned as we move into the afternoon part of the session, with the government spending review minutes away. 

The FTSE 100 is up less than 0.1%, with the mid-cap index rising 0.15%.

Among the leading fallers for the blue-chips are 3i Group, M&S, Legal & General, AstraZeneca and Diageo, all down between 0.8% and 1.5%.

Looking to the upcoming US opening bell, Wall Street fututes are flattish, with the Dow Jones indicating just below where they finished yesterday, while S&P 500 futures are up 0.15% and Nasdaq futures up 0.1%.

Hands are being sat on ahead of the US CPI release in just over an hour. 

11.53am: Interesting Ricardo details

There are some interesting details to the Ricardo deal, including that buyer WSP used to be a UK-listed support services group before Canadian rival Genivar bought it in 2012 as a way of getting a strong foothold in the UK.

WSP Global, as it is called now, has continued to grow in size and, says Russ Mould, head of investment at AJ Bell, Ricardo "looks to be an ideal fit for the group".

Science Group PLC (AIM:SAG), which had been building a 22% stake in Ricardo between February and May, has also "pulled off a blinding deal" to sell those shares to WSP, Mould said.

Science Group has flipped those shares for a £53.5 million profit, which he says is "not bad for a business that’s only worth £234 million".

"Science Group had rattled the cage and got in a public spat with Ricardo, accusing it of poor operating performance and ineffective governance."

This campaign has put Science Group "on the radar as an activist investor to watch closely". 

11.31am: BT reportedly eying TalkTalk takeover

Shares in BT Group PLC (LSE:BT.A) are up 1.9% after reports yesterday that it is weighing a potential takeover of rival TalkTalk.

It is in the "early stages of exploring a takeover", the Telegraph reported, citing sources in the City, as its Opereach network faces threats from TalkTalk and other 'altnets'. 

TalkTalk, the UK's fourth-largest broadband provider, narrowly avoided collapse last year only when boss Charles Dunstone, owner Toscafund and other shareholders invested £235 million amid an insolvency threat connected to its costly £1.2 billion of debt.

No talks have been held yet and bankers have not been asked to draw up takeover plans, the report said.

Competition issues might rule such a move out, with a tie-up controlling about 36% of the market.

10.53am: Talk of Reeves' potential replacement

As Rachel Reeves prepares to deliver her spending review plans announcement, bookmakers are reporting shortening odds that she could be replaced soon.

Odds on Labour veteran Pat McFadden replacing Reeves at the head of the Treasury have shortened in recent days.

"McFadden has been cut from 5/2 to 2/1 to be the next Chancellor of the Exchequer, making him the firm market favourite and reflecting growing speculation around Reeves’ future in the role," says William Hill spokesperson Lee Phelps.

McFadden, current minister for intergovernmental relations, was also flagged as a potential replacement by the bookmaker ahead of the March Budget.

McFadden was a speechwriter and policy adviser to Labour leader John Smith, an adviser to Tony Blair and was appointed to the cabinet under Gordon Brown as business minister.

The momentum in backing for McFadden’s "suggests he’s increasingly seen as next in line should a change come", says Phelps.

10.29am: Vistry and builders tops risers on £39bn govt spending splurge 

Ahead of the spending review just after noon today, housebuilders are getting a big boost from reports that Chancellor Rachel Reeves will allocate £39 billion to building new affordable homes. 

Vistry Group PLC (LSE:VTY), a specialist in this area via its Partnerships business, jumped 9% to sit atop the FTSE 350 leaderboard.

The Financial Times and Guardian are reporting that Reeves will nearly double government spending on affordable housing, with grants to be spent from 2026-2036 for local authorities, private developers and housing associations. 

The extra spending for Angela Rayner's housing department will be joined by expected £15.6 billion for local transport projects and the £14.2 billion revealed yesterday to build a new nuclear power plant at Sizewell C.

Reeve’s large investment in these area will "contrast with tight budgets for many Whitehall departments", the FT reports. 

9.28am: Tepid market moves

European stocks are not showing a major reaction to the trade framework agreed by the world's two largest economies, with the FTSE 100 up 0.2%, Germany's DAX and France's CAC up 0.3%. 

Spain's IBEX is down 0.35%, but that's in large part due to a 5% fall for Zara owner Inditex after it published solid Q1 results that were a little disappointing in some places. 

The US and China's preliminary "chips-for-minerals agreement" has seen a tepid reaction in China, though local equity markets rallied.

"This is all about the two sides realising what they cannot do without – it's not a breakthrough on tariffs – just an agreement to uphold the temporary truce that was agreed in Switzerland," says market analyst Neil Wilson at Saxo.

A positive outcome from the talks "had been largely discounted by markets over the last couple of days" anyway, he adds. 

London stocks have caught some bid on Wednesday, "but overall moves appear muted for now across European equity markets and US futures", Wilson says.

"Financials, miners and housebuilders were among the top risers early doors as the Footsie starts to look like it’s bursting to make a break higher.

"Trade optimism is a tailwind of sorts, but probably more than anything it’s just about flows...only need small flow diversion from US to UK to really boost the market. Reminder that the record intra-day high is 8,908.82, but the key is the closing high at 8,871.31."

The FTSE 100's 8.6% rise in the YTD "is a sign that a) it's offering some relative shelter with defensive names, b) benefitting from flow dynamics and c) seen as potentially secular shift winner from US", he adds. 

Wilson also reflects on some tech developments with WPP's outgoing CEO offered up a warning about "how the ad industry is racing to get to grips with AI before it replaces huge swathes of the sector...an industry on the cusp of making itself irrelevant?"  

While on this topic, Meta invested $15 billion for a 49% stake in data-labelling firm Scale AI, as part of efforts to bolster its position in artificial intelligence. 

Tesla's robotaxi launch is being pushed back to June 22nd and "will probably be postponed again", Wilson says.

Meanwhile, Elon Musk has just tweeted to say he regrets some of the social media posts he made last week as part of his public dust-up with Donald Trump.

I regret some of my posts about President @realDonaldTrump last week. They went too far.

— Elon Musk (@elonmusk) June 11, 2025

8.45am: Ibstock warning

The FTSE 250 is also on the up this morning, as a second day of gains for housebuilders offsets a 14% fall for brickmaker Ibstock PLC (LSE:IBST) on the back of a profit warning.

It issued an early second-quarter update indicating that while brick volumes were better than expected, sales came from lower margin customers, ie housebuilders, where price recoveries were weaker than expected.

The group has warned that EBITDA will be around £77-82 million, which analysts at Peel Hunt say compares with the current consensus of roughly £92 million and last year's £79 million.

Ibstocks also expects net debt to be worse.

8.19am: Uncharted territory for UK blue chips

Having flirted with its record high on several occasions yesterday, the FTSE 100 "breezed past the record closing level once more at the open, driven by a rising global tide which is lifting all boats", says market analyst Richard Hunter at Interactive Investor.

"Stocks at the sharp end of Asian focus were particular beneficiaries," he notes, while buying among the miners "typified a more risk-on approach".

Hunter says the spike of 8.5% in the Footsie so far this year is leading the index "into unchartered positive territory".

This comes as the constructive talks between the US and China lead investors to "hope that the worst of the tariff turbulence may have passed", though details of the framework agreed in principle were "patchy and in any event yet to be signed off by both presidents".

Hunter says the market will be mainly focused on US consumer price inflation today, with UK domestic matters also under the spotlight with the announcement of the spending review by the Chancellor.

"The plans are likely to focus on defence, education and the NHS although it is less clear where the savings are likely to come from.

"The review comes against a weakening economic backdrop as evidenced by a weakening labour market release yesterday. The latest development implies that the UK economy is perhaps less robust than had been anticipated, although more positively for borrowers this could put extra pressure on the Bank of England to lower interest rates again."

8.12am: FTSE sets new record high (edit)

The FTSE 100 notched a high of just 8,885.38 in early trading, which tops the previous record closing high of 8,871.31 that was reached on 3 March but is still below the intraday high of 8,908.82.

Prudential, Standard Chartered, Weir Group and Lloyds Banking Group are among the top risers this morning, with HSBC not far behind. 

Pru, StanChart and HSBC all have a strong China focus.

8am: Trade 'framework' leaves investors wary  

Deutsche Bank macro strategist Jim Reid says the US-China trade 'framework' agreed last night seemed to show no evidence of progress on topics such as the fentanyl-related 20% tariffs on China that the US has implemented since February.

"So while the mood music has stayed positive, investors may be wary of the pattern that emerged during the previous US-China trade talks in 2018-19, when apparently constructive in person meetings seemed to take a step back as the negotiating teams returned to their capitals.

"So there's perhaps a little disappointment this morning that we haven't yet got a bigger announcement, even though there's time to hear the full conclusions of the meeting," says Reid. 

He also notes other trade news last night, where the US Court of Appeals extended its temporary reprieve for the administration’s tariffs that had been blocked by the US Court of International Trade in late May.

Arguments in the case have now been scheduled for 31 July, which leaves wide-ranging tariffs imposed under the International Emergency Economic Powers Act in place.

It also confirms that "the legal uncertainty over their use will remain unresolved until well after the July 9 deadline for the reciprocal tariff delay", says Reid.

Separately, Bloomberg reported yesterday that the US and Mexico are close to a deal that would remove 50% of steel imports from Mexico up to a certain quota, "adding to the sense that sectoral tariffs are up for negotiation in US talks with trading partners".

Market analyst Kathleen Brooks at XTB says this "good news on trade is giving the market hope that the US will be able to reach agreements to set tariffs at reasonable levels with its main trading partners before the end of the reciprocal tariff reprieve next month".

While the EU is "conspicuous by its absence", once an agreement with China is done she expects the EU to be "next in line".

Brooks says that while the trade news is positive for stocks, "without a concrete agreement between the US and China, this means that we could see stocks rally alongside gold for some time".

Another reason why stocks are in a "risk friendly environment" is the recent recalibration in interest rate expectations and a drop in bond yields, says Brooks, with the UK gilt market was the top performer ysterday, with yields dropping sharply across the curve.

The rise in unemployment to a four-year high and drop in payrolled employees has "boosted expectations that the BoE will speed up their rate cutting cycle to protect the economy from the twin effects the rise in employer national insurance, and US tariffs".

7.50am: Ricardo agrees takeover from Canadian consultant

Another takeover.

Ricardo PLC (LSE:RCDO) has agreed to be taken over by Canada's WSP Global Inc (TSX:WSP) for a price of 430p per share, which values the UK engineering and environmental consultancy at £281 million.

The boards of the two companies agreed on the terms of a recommended final cash offer that represents a premium of 28% to the closing price yesterday of 335p and 69% over the average for the past three months. 

However, the level of the bid looks a little opportunistic given that a price above 500p was seen as little as a year ago, though this was undermined by a profit warning from Ricardo in January.

Elsewhere, GlobalData PLC (AIM:DATA) says its board has ended talks that had begun after a bid was made by ICG Europe.

7.29am: Assura picks PE offer over PHP

The board of Assura Group (LSE:AGR) has recommended an increased £1.7 billion final takeover offer from private equity groups KKR and Stonepeak, rejecting a rival proposal from Primary Health Properties PLC (LSE:PHP).

KKR's consortium upped their final offer to 52.1p per share in cash, including two 0.84p dividends. This represents a 39.2% premium to the pre-offer price.

After weeks of due diligence into the PHP offer, directors of the healthcare property developer concluded that bid presented "material risks and downsides to Assura shareholders", including over-leverage and uncertainty around planned asset disposals.

7.16am: FTSE called lower ahead of spending review

The FTSE 100 is believed to be poised for a slight retreat on Wednesday, ahead of Rachel Reeves' spending review and after the US and China agreed the "framework" of a trade deal overnight. 

Futures for London's blue-chip index are pointing to a decline of 18 points, which would remove most of the 21.8 points added by yesterday's close at 8,853.1.

US stocks ended higher last night, with the S&P 500 and Nasdaq closed around 0.6% higher, with the Dow Jones inching up 0.25%.

Later, trade delegations from Washington and Beijing in London thrashed out further details to flesh out the basic agreement made between President Trump and China's President Xi last month and at a previous meeting in Geneva, with both sides now going back to their respective leaders to confirm the final deal. 

US commerce secretary Howard Lutnick said the deal should resolve the White House's concerns "rare earth" minerals and magnets.

This morning, Asian stocks are higher, with the Hang Seng leading the way, up 1.1%, while the Shanghai Composite has added 0.6%.

5am: What to watch on Wednesday 11 June

Results are scheduled from Revolution Beauty Group PLC (AIM:REVB), though launched a formal sale process after received a preliminary bid from an unnamed company, days after revealing talks with banks over funding.

Other results on the day are expected from pub company Fuller Smith & Turner PLC (AIM:FSTA), investment group Molten Ventures PLC (LSE:GROW) and pawnbroker Ramsdens Holdings PLC (AIM:RFX).

At around half past noon, the Chancellor of the Exchequer will also announce the government's spending review, where increases in day-to-day spending for the NHS, defence and schools are expected, while making cuts to other budgets, including benefits.

Rachel Reeves has tweaked Treasury borrowing rules to allow for more investment in infrastructure projects, but has self-imposed fiscal rules to meet, including ruling out borrowing for the day-to-day spending to be revealed in this announcement.

Much has already been announced, but the risk on the day for markets may be that the 'bond vigilantes' emerge if they do not like what they hear, analysts warned. 

Later in the day, markets are likely to react strongly one way or another to US inflation data, with the consumer prices index due at 1.30pm UK time. 

Announcements due:

Interims: Ramsdens, TwentyFour Select Monthly Income Fund

Finals: Fuller Smith & Turner, Molten Ventures, Revolution Beauty Group, VP

Overseas earnings: Chewy, Inditex

Economic announcements: CPI Inflation (US)