FTSE 100 today: up as Trump postpones Iran decision; May retail sales slumps

UK markets showed mixed performance Friday: the FTSE 100 rose 0.5% and the pound gained 0.3% after Trump postponed a decision on striking Iran, while retail sales sharply declined 2.7% in May and government borrowing exceeded forecasts. In company news, Downing Renewables shares soared 22% following a takeover bid from Bagnall Energy, while Berkeley Group shares slid over 8% after reporting a 5% drop in pre-tax profit and a decline in forward sales.

Analysis

British equities, exemplified by a 0.5% rise in the FTSE 100, and the pound, which gained 0.3% against the dollar to briefly touch 1.35, responded positively to the U.S. President's decision to postpone a strike on Iran, easing immediate geopolitical tensions. This market uplift occurred despite concerning domestic economic indicators: U.K. retail sales plummeted by 2.7% month-over-month in May, a sharp reversal from April's 1.3% growth and significantly below economists' expectations, largely due to weaker food store spending. Concurrently, public sector borrowing in May reached £17.69 billion, exceeding the £17.1 billion forecast, although borrowing for the initial two months of the fiscal year remains £2.9 billion below Office for Budget Responsibility (OBR) projections, with the May budget deficit at £12.8 billion, just under the OBR's £13.0 billion estimate. Corporate developments presented a mixed picture. Downing Renewables & Infrastructure Trust PLC (LON:DORE) shares surged 22.4% following a proposed all-cash acquisition by Bagnall Energy Limited at 102.6016 pence per share, a 23.62% premium to its June 19 closing price, valuing DORE at approximately £174.55 million. Conversely, Berkeley Group Holdings PLC (LON:BKGH) shares declined over 8% after reporting a 5% decrease in pre-tax profit to £528.9 million for FY25 and a notable drop in forward sales to £1.4 billion from £1.7 billion, overshadowing the fact that revenue edged up to £2.49 billion and the company reiterated its profit outlook through FY27; operating margin did improve to 20.1% and gross margin rose to 26.6%. Separately, Amazon.com Inc (NASDAQ:AMZN) faces a U.K. regulatory probe by the Groceries Code Adjudicator concerning potential delays in supplier payments between March 2022 and June 2025.

Key Decisions for Investors

• Investors should monitor the U.K. economic landscape closely, as the temporary relief from geopolitical easing contrasts with weakening retail sales and elevated government borrowing, potentially impacting domestic-focused equities and consumer discretionary sectors.
• Shareholders in Downing Renewables & Infrastructure Trust PLC (DORE) should evaluate the 23.62% premium offered in the Bagnall Energy takeover bid as a significant realization event.
• Holders of Berkeley Group Holdings PLC (BKGH) should scrutinize the decline in forward sales and pre-tax profit against the company's reiterated outlook and improved margins, weighing short-term performance headwinds against longer-term guidance.
• Investors in Amazon.com Inc (AMZN) should consider the potential financial and reputational risks associated with the U.K. Groceries Code Adjudicator's investigation into its supplier payment practices.