Must read: FTSE 100, JD Sports, BHP, oil, UK inflation

The FTSE 100 has opened broadly flat, with JD Sports Fashion (LSE:JD.) at the top of the leaderboard thanks to a broker upgrade – Deutsche Bank raised its price target on the stock from 85p to 100p. 

BHP Group Ltd (LSE:BHP) reported annual profit of $10.16 billion (£7.51 billion), down 26% year-on-year, hitting a five year low and falling short of analysts’ expectations on the back of weak iron ore prices which fell nearly 20% over the year. However, the dividend came in a bit higher than anticipated, helping to support shares. 

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US brokered peace negotiations to try to end the Russia-Ukraine war continue to dominate. It looks like talks are making progress after a constructive meeting between Trump and Zelensky which the President of Ukraine described as the ‘best’ so far. However, no peace deal or ceasefire has been agreed. 

Trump said on Truth Social that he ‘began the arrangements’ for a summit with Zelensky and Putin. Meanwhile, Ukraine reportedly offered a $100 billion weapons deal to the US in return for security guarantees. European leaders have also been involved in talks in Washington but they have disagreed with Trump over the need for a ceasefire. However, Trump suggested that the US might help with security guarantees for Ukraine. 

Oil prices are under pressure, reversing after a 1% gain in the previous session as developing talks increase the chances of an end to Russian crude sanctions.  

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US futures are pointing to a softer open as markets await a key gathering of central bankers at the Jackson Hole summit. It comes after US indices were broadly flat on Monday. In terms of stock specific news, Softbank is injecting $2 billion of capital into struggling chipmaker Intel Corp (NASDAQ:INTC), paying $23 per share, slightly below Monday’s closing price to acquire a stake of just under 2%. Softbank shares were down while Intel jumped in after-hours trade.

UK INFLATION PREVIEW

Tomorrow’s ONS data is expected to see another rise in UK inflation for July, after hitting 3.6% in June, the highest since January 2024, and 3.4% in May. 

Inflation is running much hotter than the UK government and the Bank of England would like and there are growing concerns about persistent price pressures in the economy. 

Although inflation has retreated significantly from the Covid-era peak of 11% in 2022, inflationary pressures have resurfaced lately with the Bank of England projecting the consumer price index (CPI) will rise further to 4% in the months ahead. There are particular worries about domestic food price inflation (which was 4.5% in June, higher than that in the euro area), as well as uncertainty around how Trump’s tariffs could push up prices.  

With inflation above the Bank of England’s 2% target, the central bank has less wiggle room to loosen monetary policy which would help to support the UK’s sluggish economy. The central bank was far from unanimous in last week’s decision to cut rates, which raises concerns about the potential for a scenario of higher for longer interest rates. It is likely that the central bank will cut interest rates again before the end of the year.