The FTSE 100 surged towards a new record high on Tuesday morning amid an improved economic outlook and easing trade tensions.
The FTSE 100 is on track to end the day with its highest closing level since March 2025. In a reversal of its recent tariff-related downturn, the UK’s flagship market climbed on improved economic conditions and easing global trade tensions.
On Tuesday morning, the index rose 0.4% to reach 8,879.64, surging past its 3 March closing high of 8,871.31. This move places it back in alignment with global equity benchmarks and Germany’s DAX index, both of which have recovered to all-time highs following April’s market pullback.
It is now 8.5% up in the year to date and is just 0.4% below record intraday highs of 8,908.82. The FTSE’s current momentum reflects a clear shift in investor sentiment, with housing and energy stocks leading the way in terms of gains.
Meanwhile, the Nasdaq 100 and S&P 500 have both bounced back strongly from the tariff induced sell-off. The indexes are up 3.9% and 2.34%, respectively. Despite this, they continue to lag behind the European markets so far in 2025.
FTSE 100 climbs on US-China talks
The FTSE 100 has risen on the back of Donald Trump’s latest comments on the US-China trade talks. Following high level discussions in London between the two nations, the US president said he was positive about the progress being made.
Addressing reporters at the White House on Monday, Trump recognised the difficulty of the negotiations, as talks entered a second day. He said: “We are doing well with China. China’s not easy… I’m only getting good reports.”
Further positive soundings came from US treasury secretary Scott Bessent, who said it had been a “good meeting” on Monday. Also, US commerce secretary Howard Lutnick described the negotiations as being “fruitful”.
UK unemployment rate rises once again
Elsewhere in the UK, the unemployment rate has reached its highest level in almost four years. According to the Office for National Statistics (ONS), unemployment rose to 4.6% in the three months to April. This is up slightly from 4.5% recorded in the previous quarter.
Meanwhile, average earnings in the UK increased by 5.2%, down from a revised 5.5%. This marks the slowest annual growth since the third quarter of 2024 and falls short of market expectations. The figures could also play a key role in shaping the Bank of England’s (BoE) approach to interest rate cuts in the months ahead.
The ONS currently measures unemployment using its controversial labour force survey, which has faced declining response rates. Experts believe this leaves policymakers poorly informed and raises concerns that they may base decisions on unreliable data.
However, separate figures highlighted how UK company payrolls collapsed at the fastest rate since the peak of the Covid pandemic, with a monthly drop of 109,000 in May. Vacancies also fell by 63,000 over the three months to the end of May.
These signs of weakening in the UK labour market suggest mounting pressure on the BoE to act. With pay growth cooling and job vacancies shrinking alongside rising unemployment, there could be increased calls for future interest rate cuts.
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