The London markets faced a slight downturn on Tuesday as the FTSE 100 index fell by 32.39 points, or 0.3%, closing at 10,353.84. This decline comes against a backdrop of a lukewarm retail sales report from the United States, which has raised concerns among investors. Meanwhile, UK Prime Minister Sir Keir Starmer has firmly rebutted speculation regarding his political future, insisting he will not resign just 19 months into his term.
Starmer’s Stance Amid Pressure
In a meeting with government ministers, Starmer expressed confidence in his leadership, declaring that the Labour Party remains “strong and united.” This statement follows significant pressure from within the party, particularly from Scottish Labour leader Anas Sarwar, who publicly called for Starmer’s resignation. Sarwar’s demand stemmed from Starmer’s controversial appointment of Peter Mandelson as US ambassador, despite Mandelson’s past connections to convicted sex offender Jeffrey Epstein.
Commenting on the situation, Michael Pfister, an analyst at Commerzbank, noted that the current circumstances have discouraged any potential successors from stepping forward. With local elections on the horizon, concerns are mounting that the Labour Party could face substantial losses, creating a precarious environment for Starmer and his leadership team.
Market Reactions
The slight decline in the FTSE 100 was countered by a modest gain in the FTSE 250, which rose by 129.27 points, or 0.6%, to close at 23,469.30. The AIM all-share index saw a minor decrease, finishing down 1.65 points, or 0.2%, at 815.39.
Among the notable movers, Coca-Cola HBC emerged as a standout performer, with shares climbing 4.7% following the announcement of a robust net profit of €940.4 million (£818.91 million) for 2025, marking a 15% increase from the previous year. The company also proposed a 1.20 euros (£1.04) dividend, a 17% rise from last year, and provided an optimistic outlook for organic revenue growth in 2026.
On the flip side, BP’s shares dropped by 3.2% as the oil giant announced plans to cut capital expenditure and operating costs in 2026, alongside a suspension of its share buyback programme to focus on reducing debt and investing in future opportunities.
US Market Overview
Across the Atlantic, US markets displayed a mixed performance. The Dow Jones Industrial Average rose by 0.3%, while the S&P 500 and Nasdaq Composite saw marginal gains of 0.1% and 0.01%, respectively. However, major tech stocks faced some setbacks, with Apple down by 0.1% and Alphabet Class A shares declining by 1.9%.
In a significant development, the UK Competition and Markets Authority announced that it had secured commitments from both Apple and Google to enhance fairness in their app store processes. This agreement aims to ensure that app reviews are conducted fairly and transparently, directly benefiting the thousands of UK businesses reliant on these platforms.
Economic Indicators
US economic data released on Tuesday painted a mixed picture. Retail sales figures for December remained nearly unchanged at $735 billion (£537.88 billion), falling short of expectations for a 0.4% increase. Further, import prices rose by just 0.1%, below forecasts, while export prices increased by 0.3%, slightly exceeding predictions.
The yield on the US 10-year Treasury edged down to 4.14%, reflecting shifting market sentiments in response to these economic indicators.
Why it Matters
The current dynamics in the UK political landscape, coupled with underwhelming retail sales data from the US, underscore the fragility of market confidence. Starmer’s commitment to his leadership amidst internal challenges highlights the ongoing tensions within the Labour Party, which could have far-reaching implications for the upcoming local elections. For investors, these developments serve as a reminder of the interconnectedness of political stability and market performance, making close monitoring essential in the coming weeks.
