FTSE 100 falters on Wednesday as European stocks track lower

The FTSE 100 closed lower on Wednesday, consolidating recent progress, held back by several poorly received trading updates.

The FTSE 100 index ended down 17.91 points, 0.2%, at 8,585.01. The FTSE 250 was up 59.90 points, 0.3%, at 20,819.57, and the AIM All-Share was up 0.53 of a point, 0.1%, at 731.62.

The Cboe UK 100 was down 0.4% at 855.53, the Cboe UK 250 was up 0.3% at 18,201.61, while the Cboe Small Companies climbed 1.3% at 15,921.93.

In European equities on Wednesday, the CAC 40 in Paris was down 0.7% and the DAX 40 in Frankfurt ended down 0.5%.

In New York, the Dow Jones Industrial Average was flat, the S&P 500 index was up 0.1% and the Nasdaq Composite up 0.6%.

Investors continued to weigh the US-China trade deal which has lessened the likelihood of a global recession.

Emmanuel Cau at Barclays commented: "Lower tariffs tail risk means lower recession risk. The US-induced trade war is de-escalating more quickly than we had expected, and the meaningful US-China truce removes a key tail risk for the global economy."

"While the tariffs endgame remains uncertain, we believe that a 10% universal/30% China tariffs scenario is now likely, which is somewhat better than our 10%/60% assumption pre-'liberation day'. Our US economists now expect a less significant jump in inflation and no recession. However, macro set-up is still sub-optimal and with stocks already above pre-'liberation day' levels, a lot of good news is likely priced in already."

Nonetheless, Cau added "further upside is possible but in our view would be contingent on stronger growth to boost earnings and valuations, while much uncertainty remains about a prospective US-EU trade deal."

"We believe that so long as there is a path towards more deals and lower tariffs, markets will likely continue to see the glass half full and ignore backward-looking hard data, while soft data may actually start to rebound," Cau stated.