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The FTSE 100 rose to new highs on Wednesday, as a gain in miners pushed the price of gold above $4,000 an ounce for the first time.
The FTSE 100 index rose 65.29 points, or 0.7%, to close at 9,548.87, a new closing peak. Earlier, it had established a new intra-day best level of 9,577.08.
The FTSE 250 rose 39.03 points, 0.2%, to 22,041.83, but Objective The All-Share fell just 0.30 points to 796.07.
Sleep It traded at $4,044.28 an ounce on Wednesday, up from $3,985.98 on Tuesday, a year-to-date gain of 54%.
It crossed the $3,000 milestone in March, just before US President Donald Trump’s Emancipation Day tariffs, which created uncertainty and volatility in financial markets.
Gold had previously crossed $2,000 in March 2008 during the Covid-19 pandemic and $1,000 during the global financial crisis.
Deutsche Bank’s Henry Allen points out that, as it stands, gold is on track for its strongest annual rise since 1979, when the oil shock that year caused a huge surge in inflation.
Gold is traditionally seen as a safe harbor in financial market storms.
But juice moldAJ Bell investment director said gold’s strong performance this time has, unusually, come at a time of strong market performance.
“Traditionally, investors rely on shiny objects when markets look depressed, not when they are on the rise. This shows investors are hedging their bets,” he said.
On the FTSE 100, gold miners Endeavor Mining and Fresnillo rose 2.7% and 3.0% respectively.
Another miner in the green was Anglo American which climbed 3.2% as Berenberg upgraded it to ‘buy’ from ‘hold’, believing “Anglo American shares will continue to outperform” as a result of its deal with Teck Resources.
After this, Lloyds Banking Group rose 3.7% financial conduct authority said that costs from car finance mis-selling would be lower than its prior expectations.
The UK finance regulator said car finance mis-selling would cost providers about GBP8.2 billion, with an additional GBP2.8 billion in administrative costs, bringing the total to GBP11 billion.
Britain’s financial regulator previously estimated the total cost of compensation could range from £9 billion to £18 billion.
Davy Research said the FCA review “should be well received as it limits the potential outcomes to the lower end of its initial range”, although they stressed that “uncertainties remain”.
Other car finance providers were mixed. Close Brothers rose 5.4% and S&U PLC strengthened 2.4% but Vanquis Banking fell 2.0%.
On the FTSE 250, Unite Group fell 10% after reporting beds sold for the 2025 to 2026 academic year fell to 95.2% from 97.5% a year earlier, below its expectations.
Sales-to-rent growth stood at 4.0%, up from 8.2% a year ago.
Nonetheless, the company reiterated fiscal 2025 guidance for adjusted earnings per share of 47.5 pence to 48.25p, compared with 46.6p in 2024.
Joe Lister, chief executive of Unite Students, said: “We have sold 95% of beds and recorded rent growth of 4.0%. Although this is slightly below our target, we have seen a strong clearing period, which has contributed to our outperformance in the wider (purpose-built student accommodation) sector.”
Panmure Liberum analyst Tim Leckie said: “The outperformance cited compared to the wider PBSA sector sounds like a story we’ve heard before and investors may worry about buying the best house on the worst street.”
In economic news, the Office for National Statistics revised down UK government borrowing figures for the current financial year by £2 billion, following an error in the tax receipts used to calculate the data.
The ONS said that HM Revenue and Customs had alerted it to inaccuracies in the value added tax receipts the statistics agency had relied upon in its estimates of government borrowing published on 19 September.
As a result of the errors, which cover the period from January to August this year, the ONS cut its estimate of government borrowing for the current financial year, which began in April, by £2 billion. It also reduced the borrowing figure for the previous financial year by £1 billion.
Correcting the errors, the ONS said borrowing in the financial year to August was £81.8 billion, down from the £83.8 billion initially reported in its September 19 release.
This total is still above the £72.4 billion forecast for the period by the UK’s official fiscal watchdog, the Office for Budget Responsibility.
At the close of the London equities market on Wednesday, the pound fell to $1.3406, down from $1.3440 on Tuesday. The euro stood at $1.1615, compared with $1.1672. The dollar was trading at 152.68 yen against the yen, higher than 151.02 yen.
In European shares on Wednesday, the CAC 40 in Paris jumped 1.2% and the DAX 40 in Frankfurt closed up 1.0%.
Stocks were higher in New York at London’s close. The Dow Jones Industrial Average was up 0.3%, the S&P 500 index was 0.5% higher and the Nasdaq Composite advanced 0.7%.
The yield on US 10-year Treasuries was reported at 4.12%, down from 4.13% on Tuesday. The yield on US 30-year Treasuries fell to 4.71% from 4.73%.
Technology stocks once climbed on Wall Street, shrugging off fears about AI profitability and market bubble concerns.
The Bank of England’s Financial Policy Committee believes that the risk of a “sharp correction” in financial markets has increased.
Minutes of the FPC’s latest meeting read: “On many measures, equity market valuations appear overvalued, particularly for technology companies focused on artificial intelligence.”
But Peter Oppenheimer of Goldman Sachs said that while there are currently elements of investor behavior and market pricing that match previous bubbles, there are significant differences this time.
“First, the appreciation of the technology sector, so far, has been driven by fundamental developments rather than irrational speculation about future developments.
“Second, the major companies that have seen the strongest returns have unusually strong balance sheets.
“Third, the AI sector has so far been dominated by a few incumbents; most bubbles form in periods of intense competition as both investors and new entrants flock to the field.”
Brent oil traded at $ 66.40 per barrel on Wednesday, which was at $ 65.28 late on Tuesday.
The biggest risers on the FTSE 100 were Antofagasta, up 113.0 pence at 2,793.0p, Lloyds Banking Group, up 3.08p at 86.38p, Anglo American, up 91.0p at 2,900.0p, Halon, up 10.5p at 340.8p and Fresnillo, up 68.0p. 2,368.0p.
The biggest fallers on the FTSE 100 were ICG, down 96.0p at 2,176.0p, Seguro, down 20.6p at 647.2p, Spirax, down 160.0p at 6,960.0p, Croda, down 49.0p at 2,823.0p and LondonMetric, down 2.5p at 180.6p. But.
Thursday’s global economic calendar sees German trade data and the Bundesbank’s monthly report.
Thursday’s UK corporate calendar features half-year results from specialist finance provider S&U and a trading statement from Upper Crust owner SSP.
Contributed by Alliance News