Global stock markets delivered a mixed performance on Tuesday, May 6, 2025, as optimism over a landmark UK-India free trade agreement buoyed British equities, while US indices declined amid ongoing concerns about tariffs, monetary policy, and global growth.
The FTSE 100 index in London closed virtually flat, up just 1.07 points at 8,597.42, as investors digested the significance of the newly signed free trade pact with India-hailed as the UK’s most substantial trade achievement since Brexit.
The FTSE 250 rose 0.6% to 20,352.49, and the AIM All-Share gained 0.4% to 710.34, reflecting broader support for mid-cap and growth stocks. The Cboe UK 100 slipped 0.1%, while the Cboe UK 250 and Cboe Small Companies advanced 0.4% and 1.3%, respectively.
UK-India Free Trade Deal: A Major Boost for British Business
The UK government, led by Prime Minister Keir Starmer, announced the free trade agreement with India as a “landmark deal” set to drive economic growth and deliver benefits for British businesses and consumers.
The agreement, finalized after negotiations were accelerated in response to recent US tariff threats, is expected to increase bilateral trade by £25.5 billion by 2040 and boost UK GDP by £4.8 billion annually in the long run.
Key provisions include reduced Indian tariffs on British whisky and gin-good news for drinks giant Diageo, whose shares climbed 1.8% on the day thanks to its significant presence in India via United Spirits.
Indian Prime Minister Narendra Modi described the deal as “ambitious and mutually beneficial,” signaling a new era of economic cooperation between the two nations.
Corporate Movers: M&A and Market Reactions
- BP shares rose 1.3% amid speculation that Shell is considering a takeover bid, which, if realized, would create a European energy giant rivaling US majors in scale. However, Shell’s shares slipped 1.8% as analysts debated the strategic and financial merits of such a deal.
- Deliveroo jumped 2.1% after agreeing to a £2.9 billion cash takeover by US-based DoorDash, with the deal valued at 180 pence per share. The acquisition is set to expand DoorDash’s reach to over 40 countries and strengthen its position against rivals like Just Eat and Uber Eats.
- Marks & Spencer fell 4.7% as the retailer continued to grapple with the fallout from a cyberattack that has disrupted its online operations, with insiders warning that full recovery could take months.
- Endeavour Mining and Fresnillo surged 5.2% and 4.6%, respectively, as gold prices rallied to $3,396.32 an ounce, supporting mining stocks.
European and US Markets Under Pressure
European indices lagged, with the CAC 40 in Paris and the DAX 40 in Frankfurt both closing 0.4% lower. Political developments in Germany saw conservative leader Friedrich Merz elected chancellor after a tense two-round vote, raising hopes for swift economic reform.
On Wall Street, the Dow Jones Industrial Average dropped 0.4%, the S&P 500 lost 0.3%, and the Nasdaq Composite fell 0.5%.
Investors remain wary as the Federal Reserve’s two-day policy meeting began, with the central bank widely expected to keep rates unchanged amid heightened uncertainty from tariffs, rising inflation expectations, and weakening sentiment.