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4.30pm: Market lower

The FTSE 100 closed 75.93 points lower at 7,446.14.

7am: WH Smith

WH Smith has forecast higher full-year profit as it bet on strong travel demand during the summer on the back of robust trading across its global travel business.

The company said total group revenue for the 13 weeks to 27 May was up 23% year-on-year and 14% on a like-for-like basis.

“Looking ahead, the group is in a good position as we approach the peak summer trading period,” it said in a trading update.

“Trading is strong across all three travel divisions, and we are very well positioned to capitalise on the substantial growth drivers across our markets. Since our announcement on the 20 April, our expectations for the full financial year have modestly improved.”

7am Prudential finance director departs

Losing a finance director on the grounds of misconduct is never likely to do much for market confidence and it’s therefore no surprise to see Prudential trading lower today, said Russ Mould of AJ Bell. 

“The insurer didn’t provide much, if any, detail on the nature of the behaviour which led to James Turner’s dismissal although an insistence there were no implications for the group’s financial performance or reporting was probably enough to prevent a bigger sell-off in the shares.”

Global markets

London’s blue chip FTSE 100 index was expected to fall again after closing lower despite an agreement in US debt ceiling negotiations.

The FTSE 100 closed 105.13 points (1.38%) lower at 7,522.07.

US president Joe Biden and house speaker Kevin McCarthy reached a long-awaited deal to raise the nation’s debt ceiling, but it must be approved by Congress where it is expected to face a few hurdles.

At a press conference held on the steps of the US Capitol on Tuesday, 11 members of the ultra-conservative House Freedom Caucus railed against what they viewed as insufficient spending cuts and budget limitations in the compromise legislation.

“This deal fails completely,” said congressman Scott Perry, the leader of the group. He said those who stood with him “will be absolutely opposed to the deal and will do everything in our power to stop it”.

The Treasury has moved the deadline from tomorrow (1 June) to next Monday (5 June) when a final agreement must be reached to avoid the world’s biggest economy defaulting on its $31.4 trillion (£25tn) debt.

Financial markets remain jittery amid concern that failure to get the deal through will create economic chaos.

The Dow Jones Industrial Average was down 0.15%, as the S&P 500 finished flat. The tech-heavy Nasdaq Composite ended the day in positive territory, rising 0.32%

Graphics processor giant Nvidia was up 2.99% after a series of new product and partnership announcements were made by its founder and chief executive Jensen Huang at a tech trade show in Taiwan. During the session, the firm’s market cap also briefly surpassed the $1 trillion mark.

China’s manufacturing activity shrank in May for the second successive month, official figures showed, the latest sign that the country’s economic recovery is losing steam. The Shanghai Composite fell 1%, while the Hang Seng index in Hong Kong was down 2.9% and in Tokyo the Nikkei 225 index was 1.6% lower.

Tesla chief executive Elon Musk is on his first trip to the world’s second largest economy in over three years.

He arrived in Beijing on Tuesday and is also expected to visit Tesla’s huge manufacturing plant in Shanghai.

China’s foreign ministry said that Mr Musk was willing to expand the car maker’s business in the country, which is Tesla’s biggest market after the USThe ministry added that during the meeting Mr Musk had described the economies of the US and China as “conjoined twins”.